There’s a lot to know about insurance, especially for an investment as big as your home. So whether you’re preparing to buy, or you already closed and got your policy in the whirlwind of those last few days, it’s smart to do some homework now.
As it turns out, there are eight things that people often get wrong when they’re either choosing their homeowners insurance policy or reporting a loss. Some mistakes are negligible, while others could cost you thousands of dollars. So we did a little research to collect the facts that will help you get it right the first time.
Here are eight common misconceptions about homeowners insurance.
1. If I get hurt at home, I’m covered.
TRUTH: Actually, you’re not. But you are if someone else gets injured on your property.
2. I should get coverage for my home’s market value.
TRUTH: You want to insure for replacement value, or the cost to rebuild your home.
3. My policy will automatically cover all my stuff.
TRUTH: Pricier items like jewelry have to be covered with a separate “rider”.
4. If I get damage from mold, it’ll be covered.
TRUTH: That’s only true if the mold is from a sudden event rather than long-term exposure.
5. Theft from my car is covered by my car insurance.
TRUTH: Actually, your home insurance covers that!
6. I’m covered if there’s damage from a flood.
TRUTH: That has to be in a separate policy too.
7. If I work from home, my home office is covered.
TRUTH: Most business-related claims are only covered by a separate “rider”.
8. I should inflate any loss I claim.
TRUTH: Receipts and estimates are the best way to ensure you’re treated fairly.
And don’t worry: If you have second thoughts about your coverage, you can usually amend it any time you want. You can even switch companies — just be sure to contact your loan servicer first to find out the steps you need to take (which might include paying up front for the first year).
Ready to take the next step in your homebuying journey with all the confidence of a smart and savvy homebuyer? Our comprehensive online homebuyer course is simple and easy to access on your computer, tablet, and mobile device. It’s all the information you need, all in one place. Go ahead and get started today.