You unlock your door and beyond is another dimension, a dimension of sight and sound. Imagine your worst fear: thousands or tens of thousands of dollars of damage to your home, and the friendly man in the plaid sport coat is saying, “I’m sorry, you’re not covered.” Yes friends, you’ve just crossed over into the Homeowners’ Insurance Misconceptions Zone.
Countless homeowners end up facing an uncertain future when their home is hit by a natural disaster, a theft, or some other sort of catastrophe, and then learn the damages are not covered by homeowners or renters insurance. We’ve created a list of the top five common homeowners insurance misconceptions in the hopes that you will never again be surprised by the limits of basic coverage.
1 – Home insurance covers all your possessions.
The fact is, items like firearms, jewelry, cash and collectables usually have limits of around $10,000, especially jewelry, unless you ask for, and pay for, additional coverage.
2 – Insurance pays for mold removal.
Mold is almost never covered under homeowners insurance. The same goes for damage stemming from neglected maintenance, like a leaky pipe, leaky faucet or leaky roof.
3 – Homeowners insurance covers flood damage
Standard homeowners or renters insurance policies do not cover floods. This includes tidal surge, stream and river flooding, groundwater and rain damage. A separate flood insurance policy from the government is the only coverage available in most cases.
4 – You should have insurance equal to the market value of your home
The total amount of your coverage should be equal to the cost to replace the structures on your property; that’s because it’s rare for the land your home sits on to be irreparably destroyed.
5 – Your medical expenses are covered in case of injury.
The medical payment portion of a homeowners policy covers injuries sustained by guests when they are visiting your home and your property. The homeowner and their family are not covered for injuries.
For some tips to prepare your finances in case of a disaster, check out ACCC’s newest tip sheet: How to Disaster-Proof Your Finances
About the Author: Frank Addessi is a regular contributor to The Simple Dollar where he writes about home insurance. Frank is a licensed insurance agent in Pennsylvania and has been involved in the insurance industry for more than 25 years.
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