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 Home Insurance: Top 5 Misconceptions
Do you know exactly what your homeowner's policy will and will not cover? According to a new study, many Americans are confused as to the basic coverages of their homeowner policies. A new poll, conducted by InsuranceQuotes.com, reveals more than four in 10 people wrongly think that the policies cover mold damage and 73% don't realize that auto policies do not cover personal items that are stolen from a car. The survey was conducted via telephone interviews of 1,003 adults in the U.S. Poll respondents were even worse at recognizing that earthquake damage is not covered in the standard homeowner's policy (a whopping 51% of people failed to answer correctly).
Laura Adams, senior insurance analyst for InsuranceQuotes.com, believes the lack of understanding could be very serious in an emergency. "This misconception could prove extremely costly," Adams said. "Mold remediation can cost tens of thousands of dollars. It's often not covered by homeowner's insurance, especially if it was caused by neglected maintenance such as a leaky pipe."
Mold spores, in particular, are a common component of household and workplace dust, and mold remediation is the process of removal of mold from an indoor environment. Serious health hazards can result from mold exposure, such as: headache, nausea, eye irritation, couch, skin irritation, and/or respiratory issues.
Adams lists and attempts to demystify five misconceptions about your basic homeowner's policy:
1. Home insurance covers all your possessions
- Items such as jewelry, cash, silverware, and firearms typically have caps on coverage. Know your policy limits so you are not surprised.
2. Home insurance pays for mold damage
- Homeowner's policies do not cover mold damage resulting from neglect, such as leaky faucets or pipes that slowly result in mold growth over time. Some policies provide limited coverage for mold if there is a covered loss that resulted in water damage and subsequent mold growth from that loss.
3. Home insurance includes flood damage
- Homeowner's policies do not include flood damage. This is a peril that is specifically excluded and must be covered under a separate policy issued for that peril only. It is important to note that flooding from water intrusion is covered
if the intrusion came as a result of damage to the exterior of the house by wind or other like peril.
4. Auto insurance covers a theft from your vehicle
- The auto policy responds very minimally to theft from a vehicle. Specifically, it only covers up to $200 for tapes and CD's. Your homeowner insurance covers the theft of belongings from your vehicle, such as clothing or other personal items. The renters policy will provide similiar coverage if you do not own a home and rent.
5. Home insurance should be equal to the market value of a property
- This is one of the most asked questions lately as a result of the housing market decline. Market value and replacement value are two distinct things. Market value is what you can sell your property for, and replacement value is what it will cost to rebuild the property in case of a total loss to the property covered. Coverage for a dwelling should represent the cost to replace the structures of your property; however, it should not include the value of your land and it represents what the insurance comapny will pay to make you whole again.
Knowing how your policy will respond is a necessary step in understanding the protection that you have purchased. If you have questions about your policy, please call us at 407-657-8808.
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