There’s a lot of misinformation about homeowners insurance. Let’s set the record straight.
Learn the truth behind these common home insurance myths so you can make educated decisions about your coverage.
As of April 2020, there are no laws in Florida that require you to get homeowner’s insurance. And yet, it’s one of the most important things you will ever buy.
But how much do you understand your insurance policy?
Many of our clients find the insurance industry confusing…and we can’t blame them! Between the lingo, legal jargon, and exceptions to the (many) rules, it’s no surprise that certain common home insurance myths have stuck around.
At Harry Levine Insurance, we love to help our clients better understand their insurance policies so they can make informed decisions about their coverage. In this article, we’ll dispel some of the most common home insurance myths.
Myth #1: If your neighbor’s tree falls in your yard, they pay.
Your pesky neighbor didn’t trim that oak tree in his yard before the hurricane hit, and now the entire thing is on top of your house! Time to get him to cough up the money to fix it, right?
In most cases like this, it’s your insurance that pays for the damage (minus your deductible). Hey, we wish it was different, too. But this is how the market works!
The only way you could hold your neighbor responsible was if you could provide documentation that they were warned of the potential danger their tree could cause and refused to do anything about it. The good news is that Florida law allows you to trim any branches that are within the boundary of your property, as long as 1) doing so doesn’t damage the tree and 2) you don’t need to access your neighbor’s yard to do it.
Myth #2: All natural disasters are covered.
“Acts of God,” as they are commonly called, are not equal in the insurance industry. And no, you aren’t automatically covered against all of them.
Here in Florida, we have a few different types of Homeowner’s Insurance policies, and they each protect against different perils. Some only cover 11 specific named perils. Others may cover 15. The broadest coverage types will cover anything that isn’t specifically excluded.
But there are two kinds of natural disaster that will almost never be covered under a standard Homeowner’s Insurance policy: floods and earthquakes. To be protected against flood damage (even one caused by a hurricane), you will need to purchase flood insurance.
The best way to know what perils you’re actually protected is to read over your insurance contract and talk to your local independent insurance agent about it!
Myth #3: Pests and mold are covered.
Cleaning up after a termite or mold infestation is a long (and expensive!) process. Good thing you have insurance, right?
Don’t get too excited.
Most insurance policies are designed to cover sudden losses (i.e. things that you didn’t see coming and/or couldn’t prevent). Pest infestations typically fall under the “excluded” category. That’s why things like termite bonds exist.
Mold damage is often covered by home insurance, but often for specified limits that are lower than your full house coverage limit. This is because of a long and storied history of mold claims and insurance fraud in years past.
This is an instance where an ounce of prevention is worth a pound of cure. Look out for the most common signs of mold and pests, and get them taken care of when the issue is relatively small. Routine maintenance and inspections are a critical part of homeownership!
Myth #4: Everything inside my home is covered.
Your typical Homeowner’s Policy covers you in multiple areas: the “dwelling,” or physical structure of your home; outlying buildings (such as a garage or shed); and your personal belongings. And in fact, your personal belongings are typically protected against theft even outside the home.
But this doesn’t mean that everything in your home is covered without question.
Most policies place a limit on certain high-value items. Some things worth more than $1,000 (such as jewelry) will have to be appraised and added to your policy as a rider in order for you to be compensated for their full value in event of a loss.
Myth #5: I’m not responsible for trespassers’ injuries.
“Wait a minute…this is a myth?!”
You probably don’t have to worry about a burglar suing you because he cut himself while breaking into your home (most of those cases are eventually thrown out of court, but not all). You do have to worry about injuries caused by “attractive nuisances.”
These are things like trampolines and swimming pools, which—although hazardous—could entice someone onto your property (and into danger). If you haven’t taken proper precautions to prevent guests (invited or otherwise) from becoming injured, you’re putting yourself at risk.
Remember, trespassers aren’t always nefarious. Curious children who want a spin on your trampoline or a dip in the pool could get hurt…then you’ll be on the hook for not securing your property.
Myth #6: Insurance will pay to rebuild my home if it is completely destroyed.
The threat of fire, tornadoes, hurricanes, and other disasters are why homeowners get insurance in the first place. But simply having an insurance policy doesn’t mean that you will be receive enough compensation to rebuild your home from the ground up.
When you purchased your Homeowner’s Insurance policy, you chose a “dwelling coverage” amount, which is the policy limit on the physical structure of your home (excluding things like land). If you selected a dwelling coverage amount based on how much your home was worth on the real estate market, you could be either shortchanging yourself or costing yourself way too much.
In the insurance world, there’s a difference between actual cash value and replacement cost. The actual cash value of your home is its current value—as-is—including depreciation. That means a 15-year-old roof or appliance is near worthless. The replacement cost is the amount needed to rebuild your home the way it was with new materials.
These two numbers almost never match up.
Then there are building codes and municipal regulations. Ordinance & Law endorsements can be lifesavers when your city says you must rebuild to outstanding new construction methods, but your insurance policy only reads that the company must rebuild your house as it was (which the city won’t allow).
Because raw materials, building codes, and labor costs change every year, rebuilding a home can be more expensive than buying it was. Insurance markets and insurance needs are constantly changing. If it’s been a while since you re-evaluated your insurance contract, schedule a consultation with an independent insurance agent to make sure you have enough coverage for your needs.
Myth #7: I’m protected by my landlord’s insurance policy.
Too many renters are under the impression that their landlord’s Home Insurance Policy provides a hedge of protection around the home and everything inside of it.
We hate to be the bearers of bad news, but this is dangerous misinformation.
It is true that Homeowner’s Insurance covers personal belongings and liability (to a certain extent). The important thing to remember, though, is that your landlord’s policy only covers their belongings (i.e. the house itself). Relying solely on your landlord’s Home Insurance coverage leaves your belongings and your liability woefully unprotected.
You would need a separate Renter’s Insurance policy to protect your possessions (your furniture, clothing, food…basically anything you would take with you if you moved) and to cover your liability in the event that a visitor experiences injury or property damage on the premises.
Myth #8: My homeowner’s insurance will cover my family’s injuries.
Bodily Injury coverage is one of the most helpful (and least understood) forms of coverage on your Home Insurance policy.
Bodily Injury Liability coverage (as it’s actually called) is designed to pay for medical treatments for your guests, not your household. Your family does get protection, however, from any lawsuits the injured party might file against you.
Myth #9: I don’t want to file a claim, because my premiums will go up.
This is a popular belief for both home and car insurance. And while it’s true that claim history is one of the factors that go into calculating your insurance premiums, one claim probably won’t make much of a difference when it comes to your monthly payments.
However, multiple claims in a short amount of time are very likely to cause your premiums to increase. So don’t start filing claims right and left the second anything goes wrong in your home.
So how do you decide whether you should file a claim or pay out-of-pocket? That’s easy: compare the repair costs to your deductible. If the repair costs are roughly the same as your deductible (or less), it’s usually not worth it to file a claim.
Myth #10: More Coverage Is a Waste of Money
Whether it’s groceries, utilities, or insurance, most people are looking to save money in any way they can. But opting for a “bare bones” insurance policy is never a good financial decision.
For starters, what happens when you have a claim? No one can predict when the next disaster (natural or otherwise) will hit. Selecting a weak insurance policy simply to save a few bucks every month will leave you in the lurch when you actually file a claim.
Here at Harry Levine Insurance, we’ve found that the lesser coverages afforded by HO1 and HO2 policies simply aren’t worth the attractive price tag. We deal with HO3 (or Special Form) policies whenever possible, because they provide much better coverage.
If you’re looking for ways to save on your home insurance premiums, there are plenty of options that don’t negatively affect your level of protection. One of the easiest ways is to get a wind mitigation inspection.
Your home is likely the most expensive thing you will ever own, so it’s important to understand how to adequately protect it.
Don’t let any of these home insurance myths convince you to settle for weak insurance coverage! When disaster hits, you’ll be glad to know that you didn’t sacrifice security for a few extra dollars each month. It’s just not worth it.
If you have other questions about your home insurance policy or you’d like a free quote, contact the friendly agents at Harry Levine Insurance Agency today. As independent insurance agents, we can collect quotes from multiple insurance companies to find a policy that fits your needs and your budget.
We’ve been one of Orlando’s premiere insurance agencies for the last 30 years and we’d love to see how we can help you!