Tuesday, 20 November 2012

Home insurance: facts and fiction

  1. Standard home owner's insurance will not cover damage done to a home as a result of flooding.
    FACT: despite that flood damage is actually quite a common type of disaster facing property owners, coverage against flood damage does not fall under standard home insurance policies.

  2. My basic home owner's insurance policy will protect me if I am injured on my own property.
    FICTION: Any coverage pertaining to injury incurred on your property applies to guests that visit you in your home, and not to yourself or your family members (or anyone residing there).

  3. I should avoid filing any claims at all because each one will cause my premiums to increase.
    FICTION: it usually takes more than one claim to have an effect on your rates.

  4. If the cost of repairing the damage myself is close to the cost of the deductible, I should skip filing a claim.
    FACT: this is actually the most prudent thing to do if it is the case that you would be spending a similar amount either way, because it's one less incident that might contribute to increasing premiums.

  5. Opting for less coverage is a great way to get lower premiums.
    FICTION: while opting for less coverage may indeed lower your premiums, it's a pretty poor decision to make, and it could end up costing you far more than you “save” by not being adequately covered. Make sure your coverage is complete. To lower your premiums, talk to your agent and find out what incentives help to get you lower rates (like, for example, installing a house alarm).

  6. In the event of an extreme natural disaster that affects a large region, government aid will cover the damage to my home.
    FICTION: some of us could probably could get by without home owner's insurance if that were the case, but it simply isn't.

  7. When buying a new property, making a down payment of 20% or greater will reduce the amount I spend on insurance.
    FACT: while making a down payment of less than 20% does not increase your home owner's insurance per se, it does mean that you must purchase mortgage insurance in addition to your home insurance policy, so making a down payment of 20% definitely helps you avoid that.


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