The home insurance industry is shrouded in myths as many providers are rather vague about what is, and what is not, covered by your policy.
Many of us are unclear about what constitutes an ‘Act of God’ in terms of home insurance. In actual fact, the term ‘Act of God’ is nowadays no longer relevant, although you may have your claim refused if your insurer believes that any damage caused is due to freak weather conditions, or the cause of your claim is not covered by your policy. Another grey area is damage caused by pets. If the damage is caused by your pet’s natural behavior, for example, chewing or scratching, then your insurer will not pay out. However, if your pet knocks over an expensive item then this will be covered if you have incorporated accidental damage as part of your policy.
Some people believe that you should exaggerate you claim by around ten percent as it is commonly thought that insurers will cut down your claim by this amount. This idea originates from the fact that many insurance providers have negotiated discounts of around ten to fifteen percent with their regular retailers. Claiming for more than you should is fraud and could result in prosecution. Similarly, it is sometimes thought that you can ask for a cash payout rather than a repair or replacement. This is up to your insurer, unless there is a specific item that cannot be replaced in which case you are entitled to the full cash value.
Another incorrect assumption is that you should insure your home for the full market value. This is not actually the case as the amount of buildings insurance you take out should be based on how much it would cost to rebuild your home; this is often lower than the full market value and can save you a considerable amount of money in premiums.
When taking out home insurance do not automatically assume that you are covered for accidental damage. Some policies do include a certain amount of accidental damage cover, but full accidental damage cover is an optional extra, as is cover for those valuable items that you take with you outside of the home, for example, mobile phones and tablets. Adding accidental damage cover to your policy usually adds an additional twenty percent to your premium.
It is often thought that your premium increases if you make a claim. It is true that if you make a number of claims then your payments may increase, but your premiums are unlikely to rise after one single claim. Some people also often mistakenly think that their insurance policy covers all of their valuables including, for instance, expensive items of jewellery. In actual fact home insurance policies have a limit per item so if you do own items that are worth more than this top limit you will need to insure them separately.
If your home is poorly maintained and in need of repairs, for example due to mold, then contrary to widely held beliefs your insurer will not pay to cover the cost of these repairs. Nor will they pay for the cost of medical expenses if you or a member of your family are injured on the property; although your policy should cover the cost of medical expenses should a guest at your property have an accident and need to receive medical treatment.
Many of us wrongly assume that our home insurance policy protects our property from all natural disasters. However, whilst damage from fire or high winds is usually covered, damage caused by floods and earthquakes is not. If your home is in an area prone to flooding and earthquakes you will need to take out additional cover in order to be fully protected. If you are unfortunate enough to suffer damage to your property that makes it unlivable then in addition do not always assume that the cost of living elsewhere on a temporary basis will be covered by your insurer. Some policies do cover the cost of alternative accommodation, but only up to a fixed amount, and some policies offer no cover at all.
If you make a claim a loss adjuster will look into your claim and decide how much financial compensation you will receive. Don’t make the mistake of assuming that this figure is final; if you disagree with the amount offered then you are within your rights to negotiate a more accurate figure. It pays to keep receipts and to keep an up to date inventory of all your belongings. There are apps available on the internet that you can use to keep a record of the contents of your property which include purchase prices and dates of purchase.
If you are in the market for home insurance it is vital that you familiarise yourself with all the facts in order to avoid many of the common mistakes and pitfalls so often experienced by others when making a claim. You need to ensure that you have sufficient cover for both your property (if applicable) and its contents, and to not fall foul to many of the myths and misconceptions that circulate around the home insurance industry. By ensuring that you are in possession of all the facts about your home insurance policy you will avoid costly mistakes and financial hardship should your claim be invalidated; always read the small print!