Home insurance is essential for homeowners who want to protect their house and belongings against unexpected events. However, there are many misconceptions about insurance policies that can, unfortunately, lead to some pretty serious consequences, including your insurance being void.
In this article, we debunk five common myths so you can get the right home insurance (and ensure your insurance stays valid too):
1. Disputes are Lengthy and Common
Home insurance claim disputes are incorrectly assumed to be the norm, with policyholders worrying that if they make any claim, they should expect a fight to get a payout from their provider.
Disputes can happen, but they certainly are not common. In the event that there is a dispute, insurers will usually work to resolve it quickly and fairly. You can help the process along by maintaining good communication and offering as much documentation as you can.
2. All Personal Property is Covered By Insurance
Home insurance is a great way to protect your personal belongings in case of breakage or damage. However, it is important to understand that there are limitations. Very expensive items, like high-grade technology, jewelry, art, and collectibles will likely be covered. However, their coverage usually comes with a cap on the amount that can be claimed if they are damaged or stolen. Most insurance companies recommend that you schedule them as separate endorsements or even take out a separate policy for them to ensure adequate protection.
3. “Acts of God” Cannot Be Covered
Flash floods and other severe weather events are set to be more common because of climate change. Does this mean most of us won’t be insured for damage caused by these Acts of God?
Thankfully, this is a myth. While some insurers do still have the Act Of God clauses, most don’t these days. All policies will have exclusions, so it is still important to check the small print. However, you shouldn’t avoid getting insurance because you think this outdated clause will prevent you from getting the coverage you need.
4. Replacement Cost = Full Reimbursement
The average cost of homeowners insurance in America is around $2,000 a year. When they make a claim for replacement costs, many people expect to get the full value of whatever has been damaged. Sadly, although this can happen, it shouldn’t be assumed that it is the norm.
Depreciation might be factored in, and there could be a cap on how much reimbursement you get for different categories of items. It’s important to manage your expectations and clarify these details with your policyholder so you don’t end up disappointed in the event of a claim.
5. Home Insurance Covers All Kinds of Damage
It is a misconception that home insurance covers all kinds of damage to a house, including wear and tear, preventable issues (where it is proven you didn’t act on advice from professionals), and the cost of badly done home improvements (which Americans spend over $450 billion dollars on every year).
Every policy is different, but the golden rule is to read the fine print in full. That way, you know what to expect, and you won’t unintentionally void certain payouts because you haven’t followed the rules.
The golden rule for all the misconceptions above is to read the small print. Every insurance provider is different, and every policy is different. By reading the fine print and clarifying anything you are unsure of, you can avoid disappointments and set yourself up to fairly access the funds you need when damage occurs.
