5 Common Home Insurance Myths
Homeowners don’t tend to spend their free time poring over the fine print in their home insurance policies. So it’s no surprise that a number of misconceptions around home insurance persist. This article dispels five of the most pervasive ones.
1.Your insurance should cover your home’s value
Your coverage should reflect your home’s replacement value, not its market value. Replacement value refers to how much it would cost to rebuild your home. Market value is based on variables such as the price of the land and the location, which don’t factor into rebuilding costs and therefore aren’t relevant for insurance.
2.Older homes are cheaper to insure
While they’re often less expensive than newer homes, older homes often cost more to insure. This is because of the aging building materials and plumbing found in older constructions, which are prone to issues that result in expensive claims.
3.Your home insurance does not cover your car when it’s in the garage
Your home insurance covers the contents of your home and garage, but not your vehicle. If you want your car to be protected from theft, vandalism, fire and falling objects, you’ll need to get comprehensive car insurance.
4.Valuables are protected under your policy
They are, but only up to a certain limit — between $3,000 and $6,000 in a standard policy. Moreover, it’s blanket coverage, meaning that you can only be paid out for a claim up to the coverage limit, no matter how many items were stolen, lost, damaged or destroyed.
If you have expensive jewelry, watches, collectibles, or other valuables, you should consider either increasing your coverage limit or getting scheduled coverage, which covers individual pieces of jewelry for their full value.
4.Your home insurance covers water damage
Coverage for water damage under home insurance policies tends to be limited. Typically, water damage caused by a burst pipe is covered. However, coverage for damage caused by sewer backups is usually an add-on, and coverage for flood damage is also optional and only offered by select insurers.