There's vast information out there about homeowners' insurance. Some of it is true, while the rest is false. If you're relying on false myths to buy insurance, chances are you'll end up making costly mistakes. Here's a breakdown of four common myths about homeowners' insurance.
Homeowners' Insurance Is Too Expensive
According to NAIC, the average cost of homeowners insurance is $1200 per year. However, the prices can vary depending on where you stay. For example, if your area has a high rate of natural disasters, your premiums may be higher. Other factors that determine the price include the age of your home and how much it would take to rebuild after a disaster.
Thankfully, insurance companies will offer you discounts to make your policy more affordable. You may be eligible for a home improvement discount after installing new stormproof doors or replacing your old roof. Many insurance companies will also offer you discounts after installing burglar alarms or if you have gone for an extended period without filing any claim.
Homeowners' Insurance Doesn't Cover 'Hand-of-God' Incidents
There's a general feeling that natural disasters aren't covered in home insurance. In reality, most natural disasters, including hurricanes, windstorms, tornadoes, ice storms, and wildfires, are amply covered in home insurance policies. In fact, they're mandatory coverages in most plans.
Two notable missing coverages though are earthquakes and floods. But you can still buy them as additional coverages. Overall, the best way to know what's covered and not covered under your policy is to read your insurer's policy documents.
You Should Insure Your Home Based on Market Value
While insuring your home based on market value will cover some damages if a disaster destroys your home, it may not be enough to finish the rebuilding. Therefore, it's important to consider the replacement cost and not the market value.
When you insure your home for its replacement cost, you'll consider all costs associated with total rebuilding. This includes the construction costs and current market prices of building materials. When a disaster strikes, the entire rebuilding process is sorted.
Claim Settlement Is a Complicated Process
Many people avoid having homeowners' insurance out of the fear that the settlement process is complicated. But in reality, claim settlement is straightforward as long as you have followed the set procedure. When a fire destroys your home, the first thing is to notify your insurer as early as possible, following the stipulations indicated in your policy.
Your insurer will send an agent to assess the damage and file a report. They might also ask you to produce certain documents before settling your claim. Thanks to advancements in technology, policy documents can today be stored in electronic format, which is critical if you have lost or misplaced the original policy. When everything flows smoothly, you'll receive your settlement in no time.
Contact a home insurance company like Norman Heil Insurance to find out more about homeowners' insurance.
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