Home Insurance

Top 5 Myths About Homeowners Insurance

For most people, their home is their largest investment. For some, a large portion of their earned money went into the purchase of their home or it stores valuable belongings that they earned over the years. Some middle-aged people plan to sell their home and use the money for retirement. If not properly insured, all of that could be gone in a flash.

In order to be properly insured, which is a balance between being under insured or over insured, you need to be educated. The following are five common myths surrounding homeowners insurance. Contact an InsureLine Insurance Broker for more details specific to your situation and to learn how to find the right balance for you.

Myth #1: Insurance is a waste of money, you should only purchase the minimum insurance required.

Insurance is to protect you from a financial catastrophe if someone affected by you was to have an accident. If you don’t have liability insurance or enough coverage, you could lose everything you worked hard to acquire and lose future earnings. If someone is paralyzed in an accident, then you could be paying for them for the rest of their life. You should get enough liability coverage equal to your net worth.

Myth #2: My homeowners insurance will cover all water damage.

Water damage caused by a storm or flood is different than water damage caused by a leak or pipe bursting. Water damage from a flood is similar to damage caused by other natural disasters and requires purchasing separate insurance. You may also be at risk if water damage was proven to be caused by improper maintenance, such as a leaky roof resulting from improper or inadequate weatherproofing. Keep all of your maintenance records and contact an InsureLine Insurance Broker to see what your policy excludes.

Myth #3: My insurance company will put me up in a hotel during repairs.

Does your policy include a loss-of-use provision? If not, then the bill could be on you for hotel, meals and other out-of-pocket expenses quickly eating away at your pocket-book. If you are out of your home as a result of a flood or fire, the repairs could take a while keeping you out of your home. Some insurance may have maximum per diem or restrict the amount of time. Calculate how much money you would need to cover a hotel and expenses and talk with an InsureLine Insurance Broker about your loss-of-use coverage.

Myth #4: My contents are not worth much, as my furniture and clothes are all old.

In the event of an insurable loss, the insurance provider will pay for most items on the basis of replacement cost. This means they will pay for you to replace the lost item with new articles of a similar kind and quality, without taking a deduction for depreciation or time of use. Talk to an InsureLine Broker and discuss if your contents limit is adequate, and if there are any items you own that would no be eligible for replacement cost; such as fine arts or antiques.

Myth #5: I bought a new home and paid for mortgage insurance, my house is covered if it should burn down.

You are required to purchase mortgage insurance, but that is just to protect the lender if you should default on your mortgage from non-payment, if you should become seriously ill preventing you from paying, or if you should die. If you were to lose the house to an accident or natural event, mortgage insurance doesn’t cover the replacement or repair costs. You need to purchase homeowners insurance which will cover replacement costs, repairs and damaged goods inside the home. Stolen belongings are also covered with homeowners insurance.