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Confused About Homeowners Insurance? Don’t Fall For The Myths

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Homeowners insurance is typically one of the most important costs that many home buyers forget to budget for when they are buying a home.

Besides forgetting to budget for homeowners insurance many home buyers also fall for common home buying “myths” which include the following:

Myth No. 1: Home insurance is a rip-off

While home insurance costs vary by state—as well as factors like the square footage of the house, building costs in the area, and the location’s likelihood of damage from natural disasters—the average annual premium runs about $952 nationwide. But when broken down, that’s only an extra $79 that you need to add to your monthly housing budget (i.e., mortgage premium, property taxes, and interest).

Also, “considering the financial protection that you’re getting, it’s well worth the cost,” says Jeanne Salvatore, chief communications officer at the Insurance Information Institute.

For example, let’s say the average home insurance claim was $9,779 in 2014, with the average fire damage claim clocking in at a whopping $39,791. Many consumers don’t have anywhere close to that kind of cash lying around. (Indeed, 69% of Americans have less than $1,000 in savings, a recent survey by GOBankingRates.com found.) So if you’re in that group, experiencing a loss without home insurance could force you to rack up massive credit card debt in order to repair your house.

Myth No. 2: All of a home’s belongings are covered

Like car or health insurance, home insurance has limitations.

“A homeowners insurance policy is not designed to cover everything,” says Salvatore. “Each policy clearly states what’s covered and what’s not.”

While most standard home insurance policies cover damage caused by a natural disaster such as a fire, hurricane, or snowstorm, some types of personal belongings aren’t covered under basic insurance.

“If you have valuable art or fine jewelry inside your house, you might need a scheduled personal property policy to cover those items,” says Laurie Pellouchoud, a vice president at Allstate.

Myth No. 3: All injuries within a home are covered

If a visitor gets hurt at your house or on your property, your home insurance policy’s liability coverage will typically kick in to cover any claim that’s filed. But that’s not the case if you or a family member gets injured in your own home. If you slip in the kitchen or fall down the stairs, for instance, “your health insurance is what protects you from injuries, not your homeowners insurance,” Pellouchoud says. Got that?

Myth No. 4: I should base my coverage on the market value of my house

More than half (52%) of home buyers mistakenly think they should buy insurance coverage based on their home’s market value, a recent survey by Insure.com found. But for most home insurance policies, rates are based on the cost to rebuild the home—not the value of the house. In fact, “in most cases you need less coverage than the market value of your house,” says Salvatore.

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Interested in searching for homes in Bend Oregon? Contact the Deb Tebbs Group today by calling us at 541-323-4823 or click here to connect with us online. 

 

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