The subject of homeowners insurance often gets overlooked by new home buyers. Before you rush out and purchase your dream home, be aware of homeowners' insurance myths known to cause confusion.
Here are 3 common homeowners insurance myths to review so you can avoid high-cost surprises.
1. Disaster Coverage Myths
Several common myths about homeowner insurance are based on what is or isn't covered concerning natural disasters.
The Extent of Coverage for Floods
Many people who live in regions with adverse weather conditions may assume their standard homeowners' insurance covers flooding. Due to climate change, flooding has become a growing form of a natural disaster.
Home development near or on flood planes has only added to the problem. Builders and homebuyers tend to disregard flood risks. If you want to move near a river or lake, know the area's flooding history and available insurance plans. A flood can wipe out many irreplaceable personal belongings.
Over 20 percent of claims regarding flood damage originate from areas where flooding is unusual. Americans typically spend around $700 for flood protection.
The Extent of Coverage for Other Disasters
Another widespread myth about standard insurance policies is they cover every type of disaster or damage. The average loss homeowners suffer from disasters is about $12,500. The insurance coverage might only pay a fraction of the costs for damages. Furthermore, the policy might not cover the rising costs of materials and labor.
2. Degradation Coverage Myths
The Extent of Coverage for Rebuilding
Another popular homeowner's insurance myth deals with misconceptions about coverage reflecting the home's market value and repairs. So if a disaster ruins your home, does that mean your insurer will cover all the damages based on your home's current value? Not necessarily. You need to review your coverage plan with your insurance agent to understand what's specifically covered.
Insurance costs for damaged homes reflect only the rebuilding process and not the home's current market value. Adding more coverage to your plan might be a low-cost solution, depending on the insurance company and policy terms. Part of the complexity of homeowners' insurance is each policy is unique based on multiple factors. You can't assume your policy is a turnkey solution to all your insurance needs.
The Extent of Coverage against Mold and Termites
Home degradation from mold or termites may also require a special supplement to your policy. In either case, your home can be severely damaged over time. Renovation costs will build up as you postpone the fixing of problems. So it's advantageous to learn about the coverage required for complete renovation before signing any such agreement.
Moisture is a common cause of home degradation, especially in humid climates. By getting a careful inspection of your home done every year, you can identify problems early before they manifest into greater disasters. As a homeowner can take proactive steps to prevent moisture damage, a general policy might not cover all the repair costs.
3. Renters Coverage Myths
The Extent of Coverage for Renters’ Personal Belongings
Renting a room from another individual does not necessarily mean that their homeowners' insurance will cover any of your losses from a disaster or burglary. The myth that the landlord's insurance automatically covers a renter's belongings may explain why 60 percent of American renters lack renters insurance.
To ensure your personal property is protected as a renter, you should purchase your own renters' insurance plan. In some places, landlords require renters to carry their own insurance, as the premiums on such policies seldom exceed $200.
A homeowner or renter has the responsibility to read insurance agreements carefully to gain a clear understanding of the terms. Learning about insurance myths and seeking the right answers from professionals is essential to avoid surprise costs to be paid out-of-pocket. For assistance with all your insurance needs, contact the experts at
Fuller Insurance in Southern California today.
