Insurance Myths

There are many misconceptions and myths associated with homeowner’s insurance. Every year, many people lose their homes and belongings due to beleiving in these myths, and many others are sued in civil court for injuries, where an insurance policy would have paid all damages to the injured party. There are myths based on coverages associated with natural causes like hurricanes, floods and earthquakes, as well as how much the insured person will recieve.

Ten of the most common homeowner’s insurance myths include, but are not limited to;

* You must have homeowner’s insurance. Not true, as long as you own your home. However, if you have a mortgage, then you are required to have full insurance coverage.

* Homeowner’s insurance policies are all the same. Not true. Each insurance company offers different policies, and not all insurance companies offer the same amount of coverage for the same policy costs. There is no standard insurance policy offered by all insurance companies.

* Earthquake and flood damages are covered. Not true. Homeowner’s insurance policies do not cover earthquake or flood damages under normal policies. They are options that must be added on to most policies, especially in earthquake and flood zones. Government assistance is not guaranteed, and if FEMA does help cover damages, but that would be in the form of a repayable loan.

* Only belongings stolen from inside the home are insured. Not true. Theft of belongings from inside your vehicle, or from somewhere outside of the house are covered.

* Flood damages are covered. Not true. Flood coverage is an option, and should be considered if you live in a flood-prone area, or near the coast, below sea level.

* If something expensive, like a new LED LCD television set were to be stolen, it would be replaced. True and not true. If you have actual cash value insurance coverage, then the depreciation amount will be factored into the insurance payment. If you have replacement cost coverage, then yes, you will get what you paid, or the exact same model back.

* You will receive the full amount of what was stolen or lost. True and not true. If you had something expensive stolen, like a $25,000 diamond ring, you may be surprised to find that your belongings are covered to a maximum amount, usually under $5,000. However, under both policy types, cash value and replacement cost, you would still be out the amount of your deductible.

* You must use the insurance money to replace what was claimed. Not true. You may spend your insurance check any way you please.

* Home business is covered. Not true. If the insurance company is not aware of your home-based business, optional coverage is required. Some companies will include it if they are made aware, and given a complete listing of all business-related property.

* A boat, recreational vehicle or uninsured vehicle will be covered against theft, fire or vandalism. Not true. You must get separate insurance for anything not attached to your home, or that is not considered to be contents.

* Insurance is too expensive. Homeowner’s insurance can be the bargain of a life-time, especially if something were to happen, like a fire, theft or vandalism.

Peace of mind never came so cheap.