News & Updates
We know insurance can be confusing to understand, so let us review 7 common misconceptions regarding home insurance!
1. All water losses are covered by your home policy.
Not all water losses are covered by your home policy. Most policies exclude damage for different types of water loss, not limited to flood, water back up and hydrostatic water pressure.
The biggest excluded water loss is a flood. Floods are not covered by most home policies. There are carriers that offer an endorsement to add limited flood coverage to your home policy, but the best way to make sure you are covered for flood is to purchase a flood policy.
Water back up occurs when water backs up through sewers or drains. Home policies do not cover this as a covered cause of loss on a normal home policy. However, this coverage can be added to most home policies as an optional coverage, with limits ranging from $5,000 up to full your full Coverage A amount, depending on the risk and the carrier.
Hydrostatic water pressure is caused by water (usually below ground) that exerts pressure onto a building or foundation that causes leaks into the structure. Most carriers do not cover this type of water loss as well.
2. Home policies cover expensive items such as jewelry, art, guns and collections in full.
Most home policies (including condo and renter’s) provide coverage for your personal property but have smaller limits for specific types of property for losses such as theft. These smaller limits should be listed in your policy and mean that the most expensive items are not covered in their entirety. Jewelry, for example, might be limited to $1,500 in coverage. This coverage is also limited to the covered causes of loss on the home policy, and can exclude losses such as mysterious disappearance, etc. The best way to ensure your collectables and important items are fully covered is to schedule them specifically on the home policy under the inland marine endorsement.
3. Renovations don’t impact your home insurance.
Renovation work can affect your home insurance, depending on the size/scope of the renovation work, as renovations can change the cost of rebuilding your home in the event of a loss. For example, painting walls probably won’t have an impact on your insurance, but major projects like adding a swimming pool or an extension will affect your coverage. You will want to make sure your home coverage is updated to reflect these types of changes so that your coverage limit considers the new renovations. Some renovations, such as replacing your roof or adding a security system may even offer additional discounts on the home policy.
4. Home Insurance offers coverage for home maintenance.
Home policies are not maintenance policies. Wear & tear is not a covered cause of loss and is excluded from standard home insurance. For example, if your siding is old and needs to be replaced, insurance does not cover this, and you would be responsible for the cost. Coverage on home insurance is triggered by a cause of loss and cannot be used for home maintenance projects.
5. Home businesses are automatically covered under a home insurance policy.
Your home-based business is not likely to be covered under a standard home policy. There are endorsement options to add coverage for some business exposures, or you may need a commercial policy to ensure coverage.
6. As a renter, there is coverage under your landlord’s insurance for your property.
Landlord insurance policies typically cover the building itself and the landlord’s risks. You will want to purchase a renter’s policy to have coverage for your property. Renter’s insurance can also offer coverage for liability, and additional living expenses should you need to reside elsewhere during a claim. Many rental dwellings require renter’s insurance as well. Landlords want the policy to protect them but when getting a policy make sure that it protects you too!
7. The amount paid out in the event of a total loss will be the current market value of the home.
Most home policies are written on a replacement cost valuation. Replacement cost is the cost to rebuild your home to the same like, type, and quality that it was before the loss and is calculated by the insurance carriers. The replacement cost value is usually different from the market value of the home, and there are endorsements that offer extended coverage beyond the calculated replacement cost as well.
The best way to ensure you understand the losses your policy coverages, as well as to determine if you have the right amount of coverage, is to give us a call to review your policy!
