Popular Misconceptions about homeowners insurance

As a homeowner, are you familiar with all the details of your homeowner’s insurance, and how much coverage you have? According to recent studies, almost 60% of today’s homeowners don’t understand their policies and are not properly insured.

Homeowner’s insurance is a bundle of services designed to cover the potential emergency needs of owning a home. To be properly prepared for a catastrophic event, each part of the insurance package needs to be sufficient for its purpose:

• Replacement Cost. This covers the replacement of your home in case it is destroyed. Nearly 60% of homeowners have an insufficient amount of coverage, and would not be able to properly rebuild after a loss.
  
• Personal Property. Along with the actual house structure, you need coverage for personal property items you own. Furniture, appliances, electronics, clothing – everything you own – must be accounted for and covered in case of an event. 40% of those surveyed did not understand their personal property coverage and are likely underinsured.
• Liability. One of the responsibilities of owning a home is that you become liable for any kind of accidents or incidents on your property. If someone slips on the ice walking past your house, or a visitor trips on a toy and tumbles down your stairs, you may be held responsible. Liability insurance covers you for those events, up to the amount of the policy. Almost half the homeowners surveyed didn’t understand liability insurance, and 24% weren’t sure how much coverage they had.
• Deductible. The deductible amount of your property coverage is the amount you pay out of pocket in the event of a claim. A larger deductible means smaller premiums, so keeping it higher is desirable, as long as you can comfortably come up with the amount if you have a need. Deductibles do not apply to liability insurance.
• Rate Shopping. One-third of those surveyed said they do not shop for best rates. Often a homeowner can find an insurer that better fits their situation, with proper coverage for less cost. Shopping wisely can bring substantial savings in the long term.
• Coverage Changes. It’s important that as your home value changes, or if you purchase additional personal property, that you discuss these changes with your agent to assure you remain sufficiently covered.

Checking into your insurance coverage before a tragic event happens can save a lot of heartbreak later during the difficult time of a claim.