According to Aviva, as many as 30 percent of UK homeowners think that their home insurance covers just about anything that harms their home. As much as people want that to be true, it simply isn’t. Electrical breakdowns, wear and tear, and mechanical failures are just some examples of claims that are often rejected by insurance companies.
It’s clear that many people just do not understand their home insurance policies and what those policies cover. Who can blame anyone who misunderstands such a complicated thing? Perhaps you knew thathome insurance doesn’t cover everything, but the chances are that you believe a few myths about this complex industry. Here are a few common myths that you should dispel from your mind.
- Standard Home Policies Cover Belongings
If your furniture, cell phone, or other valuable possessions get damaged, your home insurance policy will take care of the expense to replace it, right? Well, not so fast. Standard home insurance policies sometimes cover televisions, computers, and other electronics, but this is not always the case. Other belongings, like jewelry, are typically not covered under standard insurance policies. You can add that sort of coverage for about 20 percent more. If you were to lose extremely valuable possessions from your home, then have a think about how you would finance their replacements without suitable cover.Releasing equity from your homemight be an option, or cashing in any savings could be an alternative; however, in most cases it would be wiser to extend your policy cover and insure anything of considerable value.
- You Should Always Insure Your Home for Its Full Market Value
It’s easy to see why so many people believe that their homes should be insured for the full price it could get on the market. After all, you want to replace your home should the worst-case scenario come true. However, this isn’t always the best idea, and it could cost you a lot of money in the long run.
Much of your home’s value comes from the land itself, not just the structure on top of it. Since even a fire or flood won’t take away your property, it’s not always necessary to insure for the full value. Instead, make sure your policy coversenough to rebuild your homeif disaster strikes.
- When You File a Claim, You Pay Nothing
If you have never made an insurance claim before, this is an easy one to believe. The point of insurance is to have the provider cover the cost to repair damage, right? Well, sort of. If your home insurance claim is accepted, your provider will pay for a lot of the replacement cost. However, you will still be responsible for the deductible. This fee will either be taken out of the check your insurance company sends, or it will be due before work can begin.
The insurance market can be tough to understand, even for people who have been around the block a few times. If you’re not 100 percent sure what your homeowner’s policy covers, talk to your agent. He or she should be happy to go over all the details and help you understand what your policy does and does not protect you against. Armed with such information, you can make better choices for your family, your future, and your finances.