Misconceptions About Home Insurance

More people are thinking about homeownership rather than renting in challenging times like the COVID-19 pandemic. A minor exodus of sorts is occurring in some cities as more people, tired of living in smaller condos and apartment spaces without the benefits of an urban lifestyle, start moving into suburbs and towns.

Working from home in a larger, detached house of your own, for example, is much more comfortable to do than the same lifestyle in a small apartment. With many people opting for homes, especially for the first time, getting home insurance is always a good idea. However, there are a few common assumptions people make about home insurance that aren’t true.

Here are the five most common misconceptions about Home Insurance

It’s Legally Required

Many people assume that home insurance is like auto insurance and that you are required by law to have it if you want to own a home. Legally speaking, this isn’t true. A homeowner can buy a home without home insurance, provided you have the cash on hand to pay for the home. If you need to take out a mortgage, the bank or other loan entity will want to see you have insurance before they approve the loan.

It’s Cheaper For Older Homes

Often the case is the exact opposite. Depending on the home’s condition, such as having older knob and tube wiring that is out of date, home insurance may be more expensive for older homes. An older home in poor condition carries more risks than a brand new home. That higher risk translates to higher premiums every month.

You’re Covered For Floods

Generally speaking, flood insurance is a separate policy unto itself. So if there is a major flood in your area, or even something like sewage back up, with sewer water flooding your basement and home, this may not be covered by your home insurance policy. You’d be on your own for repairs unless you took out flood insurance as well.

Insurance Covers Your Home’s Value

It does not. What insurance is there for is to cover the cost of repairing or rebuilding the home. In other words, even if your house, in its location, is valued at over one million dollars, if the house is burned down, you don’t get one million dollars from the insurance company; you will get the money sufficient for materials and labor.

Termites Are Covered By Insurance

Termites cause over one billion dollars worth of damage to buildings every year, but they are not covered by general home insurance. There are rare instances where termite damage to electrical wiring leads to a fire, in which case insurance will step in. However, the actual degradation of wood and structural risk a home is subjected to due to weakening by termite damage is, like flooding, not usually covered by home insurance.

Contact us

If you’re looking for home insurance coverage for yourself, we can help. Contact Panorama Insurance Agency Inc. We can talk about your home, your needs, your concerns, and find the insurance policy and additional riders you may be interested in for coverage and peace of mind you want.