Insurance Myths That Can Cost You

Homeowner’s insurance can be a bit complicated. One of the best ways to make the most of your homeowners insurance is to have an up-to-date home inventory of your personal possessions.

You can also better protect yourself by knowing what’s covered and what’s not.

Here are the five most common misconceptions about homeowners insurance:

1. Damaged items are replaced at cost. When surveyed, most policy holders did not know the difference between cash value vs. replacement cost. Actual cash value refers to the amount it takes to repair or replace a home’s contents after depreciation. On the other hand, replacement cost pays the amount actually spent to repair or replace the property. Replacement cost coverage for your personal items is included in some policies, but if your policy does not provide the coverage, it is typically available at an additional cost.
    
2. Flood damage is covered. Not true. Most standard homeowners policies do not cover damage sustained by floods, even though 33 percent of policy holders think otherwise. Be sure to check your policy’s limits, and get flood coverage if you think you’re at risk.
3. Mold damage is covered. Not true. Like termite infestation, mold damage is generally not covered under the typical policy, although some policies cover a limited amount of mold damage if the damage is the result of a covered water loss. Take measures to reduce your risk by:
    
   *Moderating your home’s humidity level.
   *Check for damp walls or carpets that could serve as mold breeding  grounds.
   *Repair water leaks promptly.
   *Replace washing machine hoses on a routine basis to avoid accidental leakage.
   *When leaving your home for an extended time, turn off water and drain pipes.
    
4. Sewer backups are covered. Not true. Sewer backups are generally excluded from most policies, but some companies offer extra coverage for damage caused by water or sewage which backs up from off the homeowner’s property.
    
5. Earthquake damage is covered. Not true. As with floods, standard insurance policies generally don’t cover earthquake damage, so if you feel your house is at risk, you may want to purchase a separate Earthquake endorsement to make sure you’re protected.

If in doubt, ask! Check with your insurance provider BEFORE disaster strikes and you find out you’re not covered for that.