Understanding Your Insurance: 6 Common Myths About Home Insurance Coverage

Home Insurance Policy ContractYour home is your most important investment. You have home insurance to protect that investment. But do you really fully understand your insurance coverage? Insurance policies can often be ambiguous, or hard to understand – sometimes quite intentionally. Today, we’re debunking some myths many people believe about home insurance.

6) Myth: Everyone Exaggerates Their Losses and It’s Okay

You may be tempted to over-inflate your losses and think, “Hey, I’m just getting my money’s worth on my insurance policy.” Besides, everyone does it, right?

The truth is: you’re way better off being honest from day one. If your insurer has even a bit of evidence that you’re padding your claims, then every future claim is going to go under intense scrutiny. One bit of dishonesty today could destroy the relationship between you and your insurer.

In more serious cases, it could also be fraud.

So if you’re thinking that your 42 inch TV kinda looked like a 60 inch TV from a certain angle, and you’ve always wanted a new 60 inch anyway, then you should probably think again. Insurers have decades of experience dealing with these types of cases.

5) Myth: Personal Injuries Experienced in your Own Home Are Covered by Insurance

It’s understandable to see why this myth persists. Some people believe their home insurance policy will provide a payout when they’re injured at home.

Unfortunately, that’s not typically the case. Consult with your health insurance provider to cover your own personal medical costs. Your homeowners’ insurance policy does have a liability portion – however, that’s designed to cover liability for guests injured on your property. It does not extend to you or your family members.

If you have a lot of negligent friends who get injured on your property frequently, then consider looking at “no-fault” medical coverage on your home insurance policy. This no-fault protection pays your guests’ expenses without tapping into your liability coverage. If there are just 2 or 3 incidents, it can pay for itself.

4) Myth: You Should Insure Your Home For Its Market Value

This is where things can get tricky. You may think it makes sense to insure your home for its market value. In reality, however, the best option is to insure your home for what it would cost to rebuild and replace it.

That’s a particularly important difference if you live in a city or region where home prices are rising quickly.

Why is this an important difference? Well, if you insure your home for market value, then you’re paying a premium on your insurance policy even though your home wouldn’t cost that much to repair or rebuild.

On the flip side, if you live in an area with a depressed home market, then it could cost far more to rebuild your home than it’s worth if you tried to sell. Talk to your insurance company to understand how much it would cost to replace your home after a total loss.

3) Myth: Your Insurance Policy Covers Everything In Your Home

Your house burns down in a horrible fire. You’re devastated, but you think,“Well, at least everything is covered in my insurance policy.”

Unfortunately, that’s not always true. Insurance policies may not cover everything in your home. For example, some insurers place limits on coverage for certain possessions – like jewelry or rare items. If you own a lot of these possessions, then your insurer may require you to purchase an endorsement, or add-on, to cover these items.

Talk to your insurer today to make sure everything in your home is covered in the event of a loss.

2) Myth: Older Homes Have Lower Insurance Costs

Some people buy older homes thinking that they’ll come with cheaper insurance.

The truth is, older homes may rely on unique construction techniques, outdated items, and other things that are difficult to emulate, repair, or rebuild by modern homeowners.

So if a flood knocks out part of your ceiling and flooring, then repairing that ceiling and flooring in an older home could be significantly more expensive than just replacing it entirely in a new home.

Crown molding, hardwood floors, plaster, stained glass, and other parts of older homes can cause your insurance rates to rise. Talk to your insurer to determine how much it would cost to fix or replace your home. Get a few different quotes. Typically, older homes won’t be as cheap as you think.

1) Myth: I Can’t Understand The Legalese And Ambiguous Language In My Home Insurance Policy, So Why Bother Reading it?

Insurance policies need to have at least some legalese. However, laws in Texas and many other states prevent the home insurance policy from having too much legalese.

If your home insurance policy has vague wording, ambiguous wording, or wording that is difficult for “a person of average intelligence” to understand, then you may have a claim against your insurer in court. In the state of Texas, ambiguous language in an insurance policy that is taken to the courts will be ruled in favor of the policyholder. Meaning courts will side with the homeowner in cases like this. Thus, it’s in your insurance agency’s best interests to make sure you understand every word in your policy.

You shouldn’t be afraid to look at your insurance policy. It’s one of the most important pieces of protection you have against the unknown. If you believe your insurer has mishandled your case or offered inadequate compensation, talk to ClaimsMate today and get the help you need from beginning to end.