Don’t believe these home insurance myths
When it comes to home insurance, truly understanding what perils you’re covered for is just as important as having the policy itself. But if you’re not in the industry, navigating the ins and outs of your coverage came sometimes seem complex. Here we’re going to clear up some of the most common home insurance myths out there and help you get a handle on what your own situation looks like.
Myth – The Only Way to Pay Less Is to Get Less Coverage
Most people assume that skimping on coverage is the only way to save money on your home insurance. That’s probably because many of the factors used to determine your premium are beyond your control, such as your home’s: replacement cost estimate; location; age; and, size.
But many insurance companies offer discounts, especially to responsible homeowners. Another option is to increase your deductible. This increases your costs if you file a claim, but insurance companies typically reward this with a lower premium.
Most insurers consider similar factors when setting your premium, but they can weigh them differently. Consider putting one of DPM Insurance Group’s brokers or CSRs to work for you. We work with numerous insurance companies and find the one that best suits your individual needs.
Myth – Homeowners Insurance Is Required by Law
Having homeowner’s insurance is important, but despite what many people think, it isn’t required by provincial or federal law. However, if you carry a mortgage, your financial institution will require you to have it as a condition of your mortgage. Lenders require home insurance because they have a financial interest in the property and want to protect it. If something were to happen to the home, they want to make sure that it gets repaired.
Myth – Self Insuring Is More Affordable Than Insurance
Self-insurance simply means that rather than buying a home insurance policy from a company, you decide to save enough money to pay for any damages you experience. That choice might be tempting if you’re particularly handy or work in construction. But while you may have no problem making small repairs, few people are able to cover the costs of rebuilding an entire house.
Myth – Homeowners Insurance Covers Flood
We’ve covered this ground before, but it never hurts as a reminder to point out home insurance policies typically exclude flood damage. It’s easy to see why so many homeowners assume it’s covered because most policies include coverage for water damage. But in the insurance business, “water damage” generally means damage caused by water originating from inside your house, like a broken freezer or a burst pipe.
This can be an expensive misconception. When you consider how common and expensive flood damage is, flood insurance is really for everyone.
Myth – Anything That Is Stolen Is Covered
Your home insurance does cover stolen items, but there are limits to how much coverage is available. The first limit is how much personal property coverage you decide to carry, which varied for everyone. So, let’s say your policy ends up with $50,000 in personal property coverage. If a burglary at your home ends up costing more than $50,000, the difference won’t be covered.
There may be other limits on your personal property coverage as well – usually for high-end items. Many insurance companies have limits for particularly expensive property, such as jewelry, furs, rugs, and artwork, and those limits are often not enough to cover the loss. For example, you might only have $1,500 of coverage for fine jewelry, so you would be underinsured if you had any seriously valuable jewelry.
The solution is to increase the limits available in your homeowner’s policy when you have big-ticket belongings. You can do that with a scheduled property endorsement.
Myth – Home Insurance Covers Pest Infestations
Home insurance typically does not cover damage caused by termites, mice, bats, and other vermin. The issue for the insurance company is that infestations develop over time, so it expects you to deal with pests before they can damage your home. Essentially, dealing with rodents is part of regular home maintenance, and insurance companies don’t pay for damage caused by neglect or normal wear and tear.
Myth – You Must Insure Your Home for Its Market Value
Believing in this myth may cost you quite a bit of money because it can lead you to pay for coverage you don’t actually need. The problem is that your home’s market value and replacement value are seldom the same. For example, a home you paid $500,000 might only cost $200,000 to rebuild.
If you have questions about what is and isn’t covered by your homeowner’s policy, the brokers and CSRs at DPM Insurance Group are here to help. We can provide a no obligation review of your current policy and help you determine if your current coverage gives you the peace of mind you’re looking for. Click here to find the DPM office closest to you: https://dpmins.com/locations/