The world of insurance is complex and often difficult to understand. Rules and laws change frequently, so what was accurate, say 10-15 years ago, may not be correct now. As your broker, it is our job to help you navigate the world of insurance. This is why we have compiled a list of 6 common home insurance myths.
1. My home’s insurable value is based on its market value.
False. Your home’s insurable value is not the same as its market value. Unlike the market value, insurable value does not include the cost of acquiring land and is generally based on the amount required for purchasing building materials and hiring contractors to build a replacement.
2. Your home insurance policy always covers flood damage.
False. Most standard home insurance policies cover water damage caused by things inside your home (like a burst pipe or a leak in the hot water boiler). But, damage caused by water that enters your home from external sources (during heavy rainfall, a sewer backup, or a sump pump failure, for example) is generally not covered on standard packages but can be purchased additionally.
3. All my valuables and possessions are covered in my home owner’s policy.
False. When you purchase a home insurance policy, you receive some content coverage. However, this content coverage might not be enough to cover very expensive or valuable possessions such as artwork. Don’t assume that you have insurance on all your possessions. When in doubt, please ask one of our insurance specialists.
4. My home business is covered under my home insurance policy.
False. Your home insurance policy will not cover claims associated with a home-based business unless you advised your insurance company and they have approved the business use on the premises.
5. Home insurance is required by law.
True, Short of. The government does not require home insurance. However, most lenders and banks require home insurance as a condition on the mortgage. Regardless if it is required or not, we strongly recommend all homeowners purchase insurance.
6. My property insurance covers my tenants.
False. While your property insurance policy will cover the apartment’s structure, it will likely not cover their possessions.
If you have any questions or would like to know if your “myth” is accurate, please reach out to one of our friendly staff members today at 1.855.726.8627.