Only 65.5% of US homeowners have home insurance. However, the average cost of a house $3.75 per square foot for repairs – this could cost you around $9,000 if your entire house was flooded. With 57% designs in a US prone to potentially dangerous natural disasters, why do so many homeowners take the risk?
Read on to find out the truth about home insurance and how it can save you from significant financial hardship down the road.
Table of Contents
Myth 1: Home insurance doesn’t cost money.
As of 2022, the average homeowner spends $1393 for home insurance. At the same time, the premium can seem expensive – especially if you don’t think your property is in danger – you never know when it could save a life. It’s easy to assume that this will never happen to you. However, an unexpected tragedy can destroy your home or property at any time.
Wildfires, hurricanes, and floods are all potential risks to your property. At best, insurance can cost you a couple of hundred or thousands of dollars. The worst-case scenario could cost hundreds of thousands of dollars.
Your home insurance policy can help renovate your house, replace things and pay for temporary housing. A thousand dollars a year seems like nothing in the face of such potential risk.
Myth 2: All my things are closed.
Whether your home insurance covers all your belongings depends on your policy. Generally speaking, your personal belongings inside and outside the home are protected. However, many regulations restrict the importation of luxury items such as jewelry, art, clothing or computers. You should read your policy carefully to understand which items are covered.
You may have to pay additional fees to cover whatever you want. Consider making a list of your most valuable possessions and ask your policy provider what is included.
Myth 3: The premium increases every time a claim is filed.
It is not true that filing a claim will cause your insurance premiums to skyrocket. In some cases – especially for extensive claims – your premium may increase. Likewise, if you file ordinary claims, it may increase. However, most of us can only claim this once or twice in our lives.
To avoid unnecessary premium increases, estimate the cost of repairs before filing a claim. If it’s only slightly less than your deductible, it makes sense to pay it yourself.
Myth 4: Home insurance covers mold, floods, and termite damage.
Generally speaking, home insurance reimburses you when an event covered by your policy causes damage to your home or property. Many standard policies do not cover mold, flood, or termite damage.
In addition, many policies do not cover foundation cracks in walls caused by poor maintenance. However, you can purchase flood insurance separately, which is a good idea if you are in a flood risk area.
Myth 5: You can’t buy a house without buying insurance.
Many homeowners believe that home insurance is a legal requirement. However, you do not need to take out a home insurance policy. Most mortgages use your property as collateral for the loan. In case of damage, the creditor also suffers. Some mortgage providers may make this a condition of the mortgage loan.
Myth 6: Homeowners insurance is based on the market value of my home.
Your home’s insurance coverage is based on the cost of rebuilding your home if it’s destroyed, including building and material costs. Location and ownership trends affect market value; therefore, it does not affect your homeowners’ insurance.
If you are only insure your home at its market value, the policy may not fully cover the costs required for repairs and restoration.
Homeowners insurance is not a requirement. However, it makes sense for most homeowners to take out a policy that covers their valuable possessions. Make sure you know what your policy covers.
keep your house in a good condition if your insurance does not cover damage caused by poor service. Remember that an insurance policy can save you and your finances if something happens to your home. Although we all hope that nothing will happen to us, why take the risk?