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.