Many people believe that their homeowner's policy will cover for most damages done to their home or belongings. What a lot of homeowners do not know is that there are many exclusions on many coverages and sometimes it can be unclear of what you have and do not have. To help clear up some of those questions, here are five common homeowner insurance myths:
Myth #1: My homeowner’s insurance policy will cover flood damage.
Fact: Your homeowner’s insurance policy does NOT cover damage caused by a flood. The only way to be properly covered by a flood is to purchase a separate flood insurance policy.
Myth #2: My homeowner's insurance policy will cover all of my valuable items such as jewelry, furs, coin collections, and guns.
Fact: Your homeowner's insurance policy does NOT cover all of your jewelry, furs, coin collections and guns. If you want better protection, you would need to schedule these items as an endorsement on your homeowner's policy or write a separate personal articles policy.
Myth #3: My homeowner’s insurance policy will cover earthquake coverage.
Fact: Your homeowner’s insurance policy does NOT cover damage caused by an earthquake. If you need Earthquake coverage, it can be added as an endorsement on your homeowner’s policy.
Myth #4: If I rent, my landlords dwelling policy will cover my personal belongings.
Fact: Your landlord insures his property, not yours. You will need to purchase a tenants policy to help protect you and your belongings.
Myth #5: I should use the purchase price of my home as my dwelling coverage amount when getting homeowner's insurance.
Fact: Your dwelling coverage amount should be based on the replacement cost of your home NOT the purchase price. Why not the purchase price? The purchase price includes the land and in the event of a loss, the land does not need to be replaced, therefore it does not need to be included. Replacement cost of your home is how much it would cost to rebuild your home in the event of a total loss. How to determine the cost of rebuilding your home? Just multiply the square footage of your home by current local construction costs.
*While these are helpful tips, each situation is unique and should be examined on a case-by-case basis. For further information, please consult your insurance policy or discuss with your insurance agent.