6 Home Insurance Myths

Everything valuable in life is often insured to protect that value. Homes are no different. In fact, they are so valuable that financed homes actually require insurance. Insurance helps protect the home owner when unexpected events affect your home such as floods, hurricanes, and theft.

Even though most of us are aware with the purpose of insurance, there are also some misconceptions about insurance that this blog is intended to dispel. ?
Myth No. 1: Home insurance isn't worth the cost
Insurance costs vary by location as well as house factors such as square footage, local rebuild costs, and risk of natural disaster. The average annual premium runs about $952/yr. nationwide, which equates to about an extra $79 on top of your monthly housing costs (mortgage premium, property taxes, interest). You hope to never have to file a claim but if you do, the insurance can save you significantly.
Consider the following example. in 2014, the average home insurance claim was $9,779 and the average fire damage claim was $39,791. If your home fell victim to these types of situations, that is a significant cost.
Myth No. 2: All of a home's belongings are covered


Insurance policies are not designed to cover everything. As with any other insurance such as health insurance or car insurance, home insurance has limitations. 
While most standard home insurance policies cover damage caused by a natural disaster such as a fire, hurricane, or snowstorm, some types of personal belongings aren't covered under basic insurance. As such, if you own valuable jewelry or art, you may want to consider a scheduled personal property policy to cover those valuables.
Myth No. 3: Insurance covers all injuries that happen within the home
You hope to never have someone get injured at your home. However, if someone gets hurt inside your home or on your property, your home insurance policy’s liability coverage will typically kick in to cover any claim that's filed. The exception is if that person who got injured is you or your family member. If you slip in the kitchen or fall down the stairs, it is your health insurance that would cover the treatment of your injuries.
Myth No. 4: The market value of a home is what the insurance coverage should be based on
A recent survey by insure.com found that more than half of home buyers mistakenly think they should buy insurance coverage based on their home's market value. However,  most home insurance policies, use the cost to rebuild a home (replacement costs), not the market value of the home to determine rates.
Myth No. 5: My home insurance also covers my home business
Many people assume that their home business is covered by their home insurance, which may be what drives many home owners with a home business to be underinsured. According to the Independent Insurance Agents & Brokers of America, 61% of home-based businesses in America lack adequate business insurance.  It is important to know that business liability and business equipment is not covered by homeowners insurance.
Therefore, if you run a home-based business you’ll want to purchase a separate insurance policy for the company. It may be as easy as attaching a business rider to your existing home insurance policy for about $100 a year, which will provide about $2,000 to $3,000 of additional coverage.
Myth No. 6: Flood coverage is included in standard policies
This is an important one is some areas of SW Florida. Don't assume that your standard home insurance policy covers flood, because it often doesn't. If you live in an area prone to flooding, you should make sure to secure a separate flood insurance policy. Homes in flood-prone areas are often required to have separate flood insurance. Flood insurance is available from the federal government’s National Flood Insurance Program as well as some private insurers.
The average policy is about $700 a year making it worth considering for those that may not be in a flood zone but still wish to be covered for other flood causes such as overflowing pool, busted water line, etc.
Always consult with a professional insurance agent to get up-to-date insurance information or answers to your questions. As a side-note, I also recommend getting more than one quote on insurance to get a competitive rate. Just be sure to use the same insurance parameters to be sure it is an apples to apples comparison.