Oklahomans need to recognize common homeowners insurance myths when they hear them. Understanding the facts about homeowners insurance can help Oklahomans make better decisions, which will save money, strengthen relationships and enrich lives. Below are common homeowners insurance myths and explanations of why they aren’t true:
Myth #1: If your neighbor’s tree falls in your yard, they pay.
Fact: Unfortunately, in most cases, if your neighbor’s tree falls in your yard or on your roof, you’re responsible for paying for the clean-up and damage it causes. You can file an insurance claim on your own homeowners insurance policy for damages to your home. As a preventative measure, it’s recommended to visit with your neighbor and discuss tree trimming before an ice or wind storm causes expensive damages.
Myth #2: Flood damage is covered by standard homeowners insurance.
Fact: A standard homeowners insurance policy doesn’t cover flood damage. Flood insurance can be purchased separately in addition to your homeowners policy.
Myth #3: Homeowners insurance isn’t worth it.
Fact: Homeowners insurance protects the largest single investment that most people will ever make. It can also offer protection from theft, vandalism and various liability lawsuits. Homeowners insurance can help protect your family from financial ruin after a catastrophe. Most people would disagree with this myth. If you use an independent insurance agent, you can shop around to find an affordable policy with the coverage you need.
Myth #4: Damage caused by insects is covered by homeowners insurance.
Fact: A standard homeowners insurance policy doesn’t cover damage caused by insects. Special coverage to protect your home from termites and other insects can be purchased separately in addition to your homeowners policy.
Myth #5: You will always be paid the stated value for your “scheduled” items.
Fact: You may only be covered for the current replacement cost, up to the stated value, of a high value scheduled item, such as jewelry. Think of a stated value as a limit, not a guaranteed dollar figure. Review your policy and consult with your insurance agent to ensure you have the coverage and loss settlement method you need.
Myth #6: Your homeowners policy will cover your existing home while you stay in temporary housing and store your belongings in a storage facility for the next six months while adding a 600 square foot extension to your home.
Fact: Homeowners policies offer less coverage or none at all while a home is vacant than they do while a home is occupied. If you stay in temporary housing for six months and store your belongings in a storage facility during that time, your home is considered vacant. A builders risk policy covers a home while under construction or renovation.
Myth #7: Damages caused by all natural disasters are covered.
Fact: A standard homeowners insurance policy doesn’t cover damage caused by floods or earthquakes. Flood and earthquake insurance can be purchased separately in addition to your homeowners policy.
Myth #8: Your medical expenses are covered in case of injury.
Fact: A standard homeowners insurance policy can include medical payments coverage, but you and your family are not covered by this coverage. Medical payments coverage helps pay reasonable medical payments for your guests if they are hurt on your premises, up to the limits on your policy.
Myth #9: You should insure your home for its market value.
Fact: Your home should be insured to what it would cost to remove the damaged remains plus the building materials and labor required to rebuild or replace your home after a covered disaster. If your home is insured for the market value, you may be underinsured. Make sure the settlement method for your home is with the replacement cost (RC), not actual cash value (ACV).
Myth #10: Condominiums are covered by the corporate owner or HOA.
Fact: A corporate owner or HOA for a condominium community typically insures the exterior, roof and common spaces of a condo property. The owner of each individual condo unit is responsible for insuring the interior of their personal condo unit. A condo owners policy is considered a “studs-in” policy for this reason.
Myth #11: Homeowners insurance only protects your property and your belongings.
Fact: Homeowners insurance protects much more than your property and belongings. A standard homeowners policy can also offer (1) liability protection in case you’re sued for causing an injury or damage to someone else’s property; (2) coverage for additional living expenses if you need temporary housing after a fire or tornado destroys your home; (3) coverage for reasonable medical expenses if a house guest is injured on your property; and many more benefits.
Myth #12: Home insurance is required by law.
Fact: You are not required by law to have homeowners insurance. However, most mortgage lenders do require homeowners to carry insurance to protect their investments. Having homeowners insurance helps lower the risk of loss if you can’t afford to repair or rebuild your home with your savings. After the mortgage is paid off, you’re no longer required to carry insurance. However, it’s still a wise decision to have homeowners insurance to protect what’s likely one of your largest investments.
Myth #13: Your premiums will go up if you file a claim.
Fact: Claim history is a factor used to calculate insurance premiums, but it’s not the only factor. One claim doesn’t always cause insurance premiums to increase. Most carriers consider the size and frequency of claims within the past 3 to 5 years when calculating premiums. One small claim probably won’t make a difference in your monthly premium, but a pattern of several claims within a couple of years might cause your carrier to not renew your policy on the expiration date. Keep in mind that insurance is for catastrophes, not inconveniences. If the cost of repairing your home or auto is about the same as or slightly higher than your deductible, it’s not worth filing a claim.
Myth #14: Making an inventory list of your possessions is a waste of time.
Fact: If you file a homeowners insurance claim, you’ll be asked to list all the items that were lost. If you make a personal property inventory before a covered claim such as a fire, tornado or theft, your claim process will be much less stressful! Take a few hours on a weekend to list everything you own.
Myth #15: Homeowners insurance will replace your belongings like new.
Fact: You may not receive enough money to replace your belongings if your personal property settlement method is at actual cash value (ACV) instead of replacement cost (RC). The actual cash value is the current (depreciated) value of your belongings, not what it costs to replace with a new version. Review your policy to make sure you have replacement cost settlement method for your personal property coverage.
Myth #16: Homeowners insurance doesn’t cover damages caused by natural disasters.
Fact: Homeowners insurance covers damages caused by a wide range of natural disasters, such as fire, wind and hail, falling objects (like trees) and ice. Two natural disasters that aren’t covered are floods and earthquakes, but they can be purchased on separate policies in addition to the homeowners policy.
Myth #17: Your homeowners policy covers your great-grandmother’s wedding ring.
Fact: Certain high-value items, such as jewelry, may be subject to a category sub-limit within the limit of your homeowners policy’s personal property coverage limit. Create a personal property inventory to understand how much coverage you need and make sure you have additional coverage for your high-value items.
Myth #18: Your homeowners insurance will cover a sewer issue.
Fact: Protection from water backup, such as a sewer line, is not automatically included in a homeowners policy. However, water backup coverage is affordable and can be added to your homeowners policy as an endorsement. A sewer backup can cause expensive damages to your floor, base boards and walls. Water backup coverage can help cover the cost of repairing these damages.
Myth #19: Everything inside your home is covered by your homeowners policy.
Fact: A standard homeowners policy offers multiple types of coverages, but some things may not be covered. Make sure your coverages and limits are sufficient to protect all of your belongings. Certain high-value items, such as jewelry, may be subject to a category sub-limit within the limit of your homeowners policy’s personal property coverage limit. Also make sure your settlement method is set at replacement cost (RC), not actual cash value (ACV) so you can afford to replace your belongings.
Myth #20: Your insurance premium goes up every time a claim is filed.
Fact: Your insurance premiums may not increase after a single claim is filed. However, a large claim or a pattern of small claims may trigger an increase or non-renewal. Estimate the cost of repairs before filing a claim. It the cost isn’t much higher than your deductible, it may be more reasonable to pay for the repair yourself instead of filing a claim.
Myth #21: Your injuries are covered by your homeowners policy.
Fact: If you or your family member is injured on your property, your homeowners insurance will not cover your medical expenses. A standard homeowners policy offers coverage for medical payments for your guests, but not for you and your family. If you or your family is injured on your property, you would need to file a claim with your health insurance, not your homeowners insurance.
Myth #22: Your homeowners insurance covers you if you get sued for fighting someone.
Fact: The personal liability coverage in a standard homeowners policy doesn’t cover intentional damage to others. This coverage is designed for liabilities of an accidental nature.
Myth #23: A homeowners policy covers all rebuilding costs.
Fact: If the coverages and limits are not reviewed and updated each year, the cost of clearing the debris and rebuilding your home after a disaster may be higher than your policy limits. In this situation, you may be stuck paying the remainder of repairs out of pocket. Review your policy each year with your insurance agent to ensure you have the proper coverages, limits and your settlement method is at replacement cost (RC), not actual cash value (ACV).
Myth #24: Homeowners insurance can pay for a new roof.
Fact: Roof damages caused by wear and tear or lack of maintenance is not covered by a homeowners policy. However, a homeowners policy does cover damages caused by accidents like falling objects (such as trees), fire and wind and hail storms. Conduct routine home check-ups to spot and repair damage as needed so your roof will last as long as possible.
Myth #25: You’re not responsible for trespassers’ injuries.
Fact: Owning “attractive nuisances”, such as swimming pools and trampolines, can put you at risk for guests’ (invited or otherwise) injuries if not secured properly. Curious children and neighbors may invite themselves to your home when you’re away for a weekend and could accidentally hurt themselves while taking a dip in your pool or trying a new trick on your trampoline. Take the proper precautions to limit unauthorized access to your property. Also ensure that any “attractive nuisances” on your property are covered by your homeowners policy.
Myth #26: Homeowners insurance covers all valuables, including jewelry and furs.
Fact: The personal property coverage in a standard homeowners insurance policy has an aggregate limit and high-value items, such as jewelry, furs and gun collections, have sub-limits for their respective categories. However, a standard homeowners insurance policy can be tailored to your needs by purchasing additional coverages as needed. Review your policy annually before it renews to make sure you have adequate coverage for your belongings.
Myth #27: Older homes cost less to insure than newer homes.
Fact: Older homes can cost more to repair than newer construction homes. One reason is because of the different construction techniques. Older homes might feature stained glass, plaster walls, hardwood floors and crown molding. Newer homes are likely to have simpler and less expensive construction materials, such as wood veneer floors and drywall.
Myth #28: If your dog attacks someone, your homeowners insurance won’t cover it.
Fact: Homeowners insurance can cover dog bite claims. However, homeowners must disclose to the insurance carrier the quantity and breed of dog(s) owned as soon as possible. Be sure to discuss your options with your insurance agent so you can find a policy that fits your needs before your dog does bite someone. The average dog bite claim is around $50,000, according to the Insurance Information Institute, Inc. (III).
Each insurance carrier has its own appetite for this type of risk. Some carriers don’t mind what type of dog you own, as long as there is no bite history. Some will cover your dog, but will increase your premium if it’s a certain breed. Some carriers will agree to a policy, but won’t cover your dog if it’s on their “banned breeds” list. Some won’t agree to a policy at all or will non-renew if they find out you have a dog listed on their “banned breeds” list.
Myth #29: To lower your insurance premium, you have to lower your coverage.
Fact: There are several ways to find lower insurance premiums, but reducing coverage is a risky way to do it. Here are five suggestions to find a low insurance premium. Shop around every few years to find a competitively priced policy. Each carrier has a unique appetite for a target market. Bundle your home and auto policies with the same carrier. Bundling two or more policies may be the best way to get a lower premium. Ask for every credit or discount available. Centrally monitored burglar and fire detection alarms can help qualify for discounts. Review your coverage limits so you’re not paying for unnecessary coverage. Do you really need $150,000 in personal property coverage? Increase your deductible if it fits your budget. If can afford a higher deductible, you can find a lower premium.
Myth #30: Your home insurance will cover damage caused by your pets.
Fact: A standard homeowners insurance policy will not cover damages to your home caused by your own pet. In addition, damage caused by other animals, such as rodents and vermin are also not covered. Review your homeowners policy for details on these exclusions.
Myth #31: Insurance will pay to rebuild your home if it is completely destroyed.
Fact: Just because you have insurance, it doesn’t mean you have enough to rebuild your home. Review your homeowners policy every year before renewal to ensure your coverages and limits are sufficient to rebuild your home after a covered disaster, such as a fire or tornado. The dwelling and other structures coverages should be high enough to cover the removal of debris and rebuilding of your home from the ground up.
If a tornado damages a large number of homes at once, construction materials and labor may be more expensive when you’re trying to rebuild. Also, building codes may be different than they were when your home was built, so you may be required to add new features that your home doesn’t currently have. For these reasons, it’s a good idea to include endorsements, such as (1) increased replacement cost for your dwelling and (2) ordinance or law. Also make sure that your settlement method is at replacement cost (RC), not actual cash value (ACV).
Myth #32: Homeowners insurance covers damage caused by lack of maintenance.
Fact: Damage caused by poor maintenance, wear and tear and mold is not covered by homeowners insurance. Homeowners are responsible for maintaining their homes and keeping their homes safe. Homeowners insurance is designed to protect from accidents, not old age and lack of maintenance.
Myth #33: Your home is covered while you’re on vacation.
Fact: If you don’t take the proper steps to prevent disasters, you may not be covered while on vacation. Homeowners are responsible for protecting their homes from known perils. If you leave for vacation during the winter without taking necessary precautions to prevent your water pipes from freezing and bursting, you may not be covered by your homeowners insurance. If you plan to be away from your home for an extended period of time during winter conditions, you should shut off your water, put antifreeze in the toilet and keep your heat on so your pipes don’t leak or flood your home.
Myth #34: More coverage is a waste of money.
Fact: Opting out of recommended endorsements in an effort to save money could result in not having enough money to rebuild your home after a disaster. Endorsements are optional coverages that can help protect you from having to pay unexpected expenses out of pocket after a disaster, such as (1) increased replacement cost for your dwelling and (2) ordinance or law. Make the right choice and set your settlement method at replacement cost (RC). If try to save money by opting for actual cash value (ACV) settlement method, you may not receive enough money to rebuild your home!
Myth #35: You can only use an insurance-approved vendor to repair your home.
Fact: Many insurance carriers offer lists of preferred vendors, but you are not limited to those companies. Madison Dunn, Marketing Manager at Phoenix Restoration advises, “You have the right to choose which contractor you want to work in your home. If you want to use a certified restoration company that’s been referred to you with a good reputation, you should be able to use that company even if it’s not listed as one of your insurance carrier’s preferred vendors. “Phoenix Restoration works hand in hand with insurance agents, property management/ hospitality companies, and clients that trust us to restore their homes and businesses.” For questions or quotes regarding water, fire, mold, or disaster response contact Madison Dunn at (918) 710-0179 or madison@thephoenixgroupok.com
Myth #36: Home insurance coverage is limited to the house.
Fact: Homeowners insurance can cover more than just your home. A standard homeowners insurance policy can protect your home, other structures on your property, your personal belongings, additional living expenses if you can’t live in your home after a covered disaster, reasonable medical expenses for your guests if they’re injured on your property and liability coverage if you’re sued after an accident.
Myth #37: Flood insurance is only for those who live in flood zones.
Fact: Flood insurance may be required by mortgage lenders for homes located in “flood zones”, but it is available in all areas. Floods can happen anywhere, so technically, all areas are “flood zones”. A standard homeowners insurance policy doesn’t cover floods, so purchasing flood insurance in addition to your homeowners policy can help protect you from a flood.
Myth #38: You can’t buy a home without buying homeowners insurance.
Fact: You can buy a home without purchasing homeowners insurance. There are no laws that require homeowners to purchase insurance for their homes. Julia Adame, Branch Manager for the Adame Team, advises, “If you pay cash for a home, you won’t likely be required to insure your home. However, if you borrow money to purchase your home, your mortgage lender will likely require you to purchase homeowners insurance to protect their investment.” She recommends, “Purchasing homeowners insurance not only helps protect your lender’s investment, but the largest investment that most homeowners will ever make.”
Myth #39: Your dwelling coverage amount is based on the purchase price of your home.
Fact: Your dwelling coverage limit should be based on how much it will cost to replace your home, not the purchase price. The replacement cost should consider how much it will cost to remove the debris and completely rebuild your home after a covered disaster, such as a fire or tornado. If you base your dwelling coverage on the original purchase price, you may have to pay out of pocket for a portion of the reclamation and construction.
Myth #40: Your homeowners insurance covers anything that is stolen.
Fact: Your personal property coverage has limits and sub-limits within some high-value categories. For example, if you have a $60,000 personal property coverage limit, but someone breaks into your home and steals $80,000 worth of property, you may have to pay out of pocket to replace the rest of your possessions after the $60,000 has been reached, including your deductible. Also, note that certain high-value items, such as jewelry and gun collections are subject to a sub-limit for their respective categories. Review your policy coverages and limits to understand if you’re properly covered. A standard homeowners policy offers basic coverages that fit the needs of most people, but coverage limits can be increased and additional coverages can be purchased as needed.
Myth #41: Anyone you hire to do work is covered under your homeowners insurance policy if he or she is injured on your property while working.
Fact: In most states, a homeowners policy can help cover a part-time worker (working less than 40 hours a week), since workers compensation coverage normally isn’t required for part time workers. That means a housekeeper, pet sitter, babysitter, or neighborhood kid who shovels your snow may be covered by a homeowners policy. On the other hand, a plumber, roofer, landscaper, or other type of contractor may not be covered by a homeowners policy, as professionals like this are typically required to have workers compensation coverage. To ensure that a homeowner is protected, it’s recommended to request a Certificate of Insurance naming the homeowner as additional insured before allowing a contractor to perform any work in the home. A nanny or a caretaker for an elderly parent or disabled child, or other live-in, full-time domestic help may be required to be covered by workers compensation coverage.
Don’t fall for common homeowners insurance myths! Do your research and learn about the coverages you need and how your insurance policy can protect you, your family and your property!
How can you buy homeowners insurance in Oklahoma?
There are two easy ways to get a quote or request more information for homeowners insurance in Oklahoma:
- Call/Text (405) 605-9891
- Email jp@schererinsurance.com