Because home insurance policies come in the form of imposingly small print, a hard truth is that many homeowners are actually not as insured as they may think. You may find yourself paying hidden, surprise costs that you never knew about, because you didn’t care to read microscopic contract jargon with your monocle.
Enlist a professional who understands this jargon and spend some time to carefully go over each item in the policy. If you understand the terms, you won’t be surprised later on if damage or personal injury strikes.
One common myth is that all of your valuables are automatically covered. Contents insurance does not necessarily cover all of your possessions, especially when it comes to valuables like artwork, motorized pleasure vehicles, or jewelry. There is a limit as to what your standard policy will actually cover. It’s possible that you may need to appraise and insure these items separately.
If you read that “insurance is based on your home’s market value,” be weary of this myth. The dwelling coverage which includes costs for repairing or rebuilding your home in the case of a loss, is not in the same ball park as the “market value” of your home. What it actually is based on is the replacement value of the home’s structure, labor cots and materials. These differences are everything.
If you find yourself dealing with an unexpected flood, don’t assume that your insurance protects against this. Depending on the region, most home insurance companies don’t include flood insurance. Especially because the value of this flooding tends to be very pricey. This also includes flooding from sewage problems, not just natural disasters.
Another issue that may not always be covered, contrary to popular belief, is that of infestations, from insects, rodents, ants, squirrels, mice, rats, raccoons, termites or any pest.
One thing to note is that a lot of policies are now excluding water damage, which is still the most common cause of loss! Insurance Agents should be aware of this and advise policyholders accordingly. They often forget, which is why it is important to speak with your agent regularly and maybe even consider switching agents if you feel you are not getting adequate information upfront.
Now that you’ve acquired this wisdom and can discern between myth and fact, give your policy another read and don’t get caught in a tricky situation.