Although it is not required by law, the benefits of homeowners insurance clearly outweigh the costs. As long as you don’t make the mistake of thinking that this type of insurance is a huge blanket that covers just about everything - including your home collapsing because it was never maintained. To help you make an informed decision, let’s look at a couple of myths about home insurance doing the rounds.
Myth 1: Home insurance automatically covers everything inside the property
Your home insurance policy will certainly pay if your TV is stolen, or if a fire destroys most of your furniture. But if the same fire destroys your original Rembrandt painting collection and these paintings were not specifically itemized in the policy, you’re in for a big surprise. The same goes for jewelry. The insurance company usually has a category limit for expensive items and they won’t pay out more than that unless you had these items listed separately - and paid a higher premium.
Myth 2: It’s cheaper to insure an older home
Not true. The fact is that older homes found on Long Island often use construction techniques that are very expensive to replace. Think hardwood floors, crown molding, and stained glass. This is why some insurance firms might even refuse to cover an older property. And if they do, they might charge you a very high premium - so it’s always a good idea to get more than one quote.
Myth 3: The insurance will pay if the roof collapses from long-term lack of maintenance
Many people think that their home insurance will protect them against things that happen over a long period, like a leaking roof. That is not the case. Generally speaking, home insurance covers things that happen suddenly and unexpectedly. If you know the roof is rotting and leaking, and eventually it collapses and damages a lot of other stuff, chances are very good the insurer won’t pay.
Myth 4: It’s clever to insure your home for market value
In most cases, it’s in fact better to insure the property for replacement value. In hot markets the market value can be much higher than the replacement value, so you will be paying an unnecessarily high premium if you insure it for market value. In depressed markets, on the other hand, the replacement cost could be much higher than the market value - but if you insure your home for market value and it is destroyed, the insurance payout will not be enough to cover the cost of replacing it.
Myth 5: Your home is automatically covered against flooding
The typical home insurance policy will protect you against a sudden accidental release of water, e.g. a burst pipe. Most policies will, however, not protect you against what is called ‘overland flooding’, i.e. water flowing over what is normally dry land and entering your home via windows and doors. Examples include melting snow and a river overflowing its banks. Living on Long Island, you should be cognizant of what your flood zone is and whether or not you need a separate flood policy.
Myth 6: Your home insurance will never set you up in a hotel and pay for everything
The truth is that most home insurance policies cover what is called ‘additional living expenses’ if you have nowhere to stay after the property is rendered unlivable because of an insured event. So if a fire destroys your home you might well end up temporarily living in a nearby hotel and get three meals a day, all paid for by your insurance firm.
Myth 7: Home insurance does not cover Acts of God
Depending on what you view as an Act of God, this statement is probably false. Most home insurance policies in fact cover damage from wildfires, lightning, hailstorms, and more. For similar types of disasters, such as earthquakes, you can get optional cover. Landslides and seawater flooding are, however, typically not covered.