Despite being one of the most common types of insurance, homeowners insurance is one of the least understood, MSN reports.
The article contends that many homeowners believe their policies will cover them for practically any damage to their house or contents. What’s not understood is many of these policies contain exclusions and restrictions on coverage that can leave you with a gap.
The article list five common ways homeowners are misguided in the belief that all items and situations will be covered.
If damage to your house is great enough, you may have to stay at a hotel or eat meals out, costs that can accrue quickly. If you don’t have ‘loss-of-use’ coverage, you’d be stuck paying out-of-pocket for those costs. MSN points out that if you’re covered for loss-of-use, it will be explicitly stated in your contract.
An under-the-radar problem may arise if a household item is damaged, say in a fire. ‘Replacement cost’ is not often a clause in policies, and it means your insurance will cut you a check for that destroyed used computer that often won’t be enough to allow you to purchase a new one.
Nearly all homeowners policies exclude flood coverage, along with earthquakes and other natural disasters, the article points out. Floods can occur due to a variety of reasons and is one of the most common causes of home damage and destruction, according to MSN. Their suggestion is to look into having a separate flood policy.
Repairing termite damage and eradicating them can cost thousands of dollars; most often termite and other pest damages are not covered by insurance. The other option is to have your house regularly check and/or sprayed by a professional.
Finally, MSN reports, an insurance company will send out an appraiser to value the loss sustained to your property and the best way to fix it. You DO NOT, however, have to view that value as final. If you can prove your loss should be valued higher, you can negotiate with the company.
The article suggests reading your homeowners insurance policy thoroughly to know what is and what isn’t included.