Misconceptions about home insurance are not just misleading, they can prove to be costly. Without the right information, you could inadvertently miss out on coverage you need or end up with coverage that you do not need. To help you make the right decisions when it comes to coverage, here are some of the myths about home insurance and the truth.
Home Insurance Pays for the Cost of Rebuilding Your Home
One of the most confusing aspects of home insurance for some people is understanding exactly how much a provider will pay when a home is totally damaged. Some homeowners believe that the insurance covers all of the costs that are associated with rebuilding a home after a disaster.
In actuality, whether or not the provider covers the cost of rebuilding your home depends on if you opt for market or replacement value coverage. Market value covers the cost of your home based on its current market value. Unfortunately, if the market value is lower than the cost of rebuilding, you will have to make up the difference.
By contrast, replacement value covers the cost of replacing the home regardless of what the market value is. Unless otherwise noted, the cost to rebuild from the ground up.
Mold Damage Is Covered By Insurance
Mold damage is a common occurrence that some homeowners believe is covered by home insurance. Whether or not a provider is willing to coverage the damage from mold usually depends on the cause of the mold.
If the mold resulted from neglect, such as a leaky faucet that you were aware of and failed to repair, the insurance company could decline to pay for the repair work. In order to have the damage covered, you would have to prove that it resulted from a situation that was out of your control.
Umbrella Policies Are Only for Rich People
Some homeowners pass on umbrella policies because they believe that their property is not valuable enough to warrant the additional coverage. What they do not understand is that an umbrella policy does not only help to cover your assets, but it can protect you from legal issues.
If someone is injured on your property and wins a settlement against you in court, your home insurance might not be enough to cover the cost of the settlement. However, an umbrella policy might. It provides additional coverage above what your homeowner’s policy covers. For instance, if your homeowner’s policy covers up to $75,000, but the settlement is for $100,000, the umbrella policy could help cover the $25,000 left outstanding.
An insurance agent, like one from Keyes Insurance Services Inc, can help you find the truth with various home insurance policies so that you can make a sound choice.