Myth #1: All personal belongings are covered.
Fact: Typically, personal belongings are covered at 50%-70% of your home’s price. If you have expensive property that you wish to insure, purchase personal property coverage separately.
Myth #2: You are required to purchase home insurance when you buy a home.
Fact: It is the homeowner’s responsibility to acquire insurance, although most mortgage companies require individuals to do so.
Myth #3: Belongings are covered at their original purchase price.
Fact: Items are covered at their depreciated value. However, if your policy contains a depreciation refund clause, you may submit receipts to regain the difference in value.
Myth #4: Coverage is based on the amount paid for your home.
Fact: Coverage is based upon the amount it would cost to replace your home. Insurance companies figure this amount by multiplying the square footage of the home by averaged local construction prices.
Myth #5: Premiums rise when claims are filed.
Fact: Most homeowners do not see a rise in rates after filing their initial claim. However, succeeding claims put homeowners in a higher risk category, which incurs higher rates.
Myth #6: All medical expenses are covered.
Fact: Medical expenses of the homeowner and his family are not covered. Medical coverage pertains only to guests who get hurt in your dwelling.
Myth #7: All natural disasters are covered.
Fact: Most insurance companies cover damage from fires and tornados, but coverage for hurricanes, earthquakes, and floods must be purchased separately.
Myth #8: Written inventory lists are unnecessary.
Fact: You will be asked to supply a list of your possessions when you file a claim. It is best to prepare beforehand.
Myth #9: Temporary residences are covered if your home is unlivable.
Fact: Some policies include a cap for alternative dwelling under loss-of-use coverage, but most do not. It is the homeowner’s responsibility to purchase this coverage separately.
Myth #10: Appraisals are final.
Fact: If you disagree with an insurance adjuster’s appraisal, you may get a second opinion or negotiate the settlement based upon your written inventory list.