Insurance Advisor at Oliver L.E. Soden Agency, Inc

4 Myths About Home Insurance

Think you know everything there is to know about home insurance? Think again! Although home insurance is one of the most common types of insurance, it’s one of the least understood. Many homeowners believe that their policy will cover them for practically any type of damage, and they are sorely mistaken when they realize that the damage isn’t covered. The truth is that homeowners insurance has a lot of exceptions and exclusions that can leave you with a coverage gap, and you may not know until it’s too late.


Let’s explore four common myths about home insurance and the truths behind them.


Myth #1: If your home is damaged, your insurance company will pay for a hotel.


If your home is damaged so severely that you can’t live in it, you would expect your insurance company to cover the costs of a hotel until you can move back in. This isn’t always true, however. If your policy doesn’t include loss-of-use coverage, then you’ll have to cover these living expenses on your own. Talk to your agent about adding a loss-of-use provision, and make sure you understand all the details (how long the expenses will paid for, limits of coverage and more).


Myth #2: If an item gets lost or damaged, your insurance company will cover the cost of a new one.


Say your computer is damaged in a flood and you turn to your insurance company for a replacement. Your homeowners policy should cover the cost to replace it, right? Not exactly. Your policy may help you out with the expense, but it will only cover the value of the computer at the time of the loss. If your computer was 3 years old, it might be valued at just a couple hundred dollars, and that wouldn't be enough to cover a new computer. Speak with your agent about adding a replacement cost clause into your policy, which would cover the full cost of the replacement.


Myth #3: Your homeowners policy covers you from flood damage.


Just about all home insurance policies exclude flood coverage. Floods are one of the most common types of home damage; they can be caused from hurricanes, burst pipes or sewer backup. If you live in a flood zone or feel that your home is at risk for flooding, talk to a company that specializes in this type of insurance so that you can weigh the pros and cons to a separate flood policy.


Myth #4: When the insurance company values your loss, the decision is final.


If your home suffers damage and you need to file a claim, the insurance company will come out and determine the extent of the damage as well as what needs to be done to fix it. An appraiser will then assess a value to the loss, which the insurance company will have to pay a minimum of. If you feel that your home was assessed lower than it should have been, you can negotiate with the insurance company. Be sure to keep receipts and photos to back up your claims.