Home insurance is a vital safeguard for homeowners, providing protection against unexpected loss or damage. However, misconceptions about home insurance can lead to misunderstandings and inadequate coverage. In this guide, we’ll shed some light on important aspects of insurance such as coverage limitations. By understanding the realities of home insurance, you can make informed decisions to ensure your home is protected to the best of your ability.
Home Insurance Covers All Types of Damage
While home insurance covers a wide range of perils, such as fire, theft, and vandalism, certain types of damages may not be covered or require additional endorsements. For example, natural disasters like earthquakes are often not covered under standard home insurance policies. To ensure comprehensive protection, homeowners could consider purchasing additional endorsements to cover specific risks not included in their standard policy.
Home Insurance Covers the Full Value of Personal Belongings
Standard home insurance policies generally include coverage for personal belongings, but there are typically coverage limits in place. These limits can vary depending on the insurance company and the policy. The coverage limit is the maximum amount the insurance company will reimburse in the event of a claim. High-value items such as jewelry, artwork, or collectibles have limited coverage under the standard policy. In most cases, the coverage limit for these items may be significantly lower than their actual value.
Homeowners may want to consider adding floaters to their policy as these options are designed to provide higher coverage limits. A professional appraisal for valuable belongings over $5000 would be required to schedule these items to specifically insure them to their full value.
Home Insurance Covers Home-Based Businesses
Home insurance is designed to protect personal property and provide liability coverage for residential purposes. When a homeowner operates a business from home, it introduces additional risks and liabilities that the standard policy does not cover.
To operate a business out of your home, a home-based business extension would need to be purchased to ensure coverage in the event of a claim. The home-based business would need to meet the underwriting guidelines of the particular insurance company you are insured with.
Home Insurance & Routine Wear and Tear
Home insurance is designed to cover sudden and accidental damage due to unforeseen events or perils. These perils typically include fire, vandalism, theft, or severe weather damage. Insurance companies consider routine wear and tear a regular part of homeownership and maintenance responsibility.
Routine wear and tear include gradual deterioration of structures or components within a home that naturally occur over time, such as paint fading, flooring wear, plumbing or electrical systems aging, or roof deterioration due to age. These are considered expected and predictable expenses that homeowners are responsible for addressing.
Home Insurance Premiums are Based Solely on the Market Value of the Home
Insurance premiums are based on multiple factors, and the home’s market value is just one aspect considered. Other factors could include home characteristics, location and the age of the house. To obtain accurate premium information, consult an insurance professional who can assess your circumstances, provide personalized quotes, and help you choose the most suitable coverage options.
Filing a Small Claim Won’t Affect Future Premiums
Insurance companies consider the frequency and severity of all claims when assessing the risk of insuring a homeowner. While a single small claim may not significantly impact premiums, a pattern of filing multiple claims, regardless of their size, can raise red flags and result in premium adjustments.
Insurance companies view policyholders who frequently file claims as higher risk, as they may indicate a greater likelihood of future claims. This increased risk can result in higher premiums, policy non-renewal, or even difficulty obtaining coverage from other insurers.
Keller & Associates Insurance Brokers provides comprehensive and tailored insurance solutions to protect your most valuable asset. Contact our experienced team today for a consultation and let us help you find a home insurance policy that meets your needs.