5 of the Most Common Insurance Myths and Why They Aren’t True
Insurance can be incredibly complicated, so it’s no wonder that sometimes rumors, myths, and untruths can be held as fact and disseminated as such.
We’ve listed a few of the most common home and auto insurance myths, and explained why they aren’t true.
Owners of red cars pay more for coverage
Many people believe that red cars are somehow more prone to accidents, traffic stops, and overall mayhem. In fact, most carriers don’t ask about car color at all when signing you up for coverage.
Why?
Research shows that your vehicle’s hue has no effect on traffic stops, the safety of passengers, or interactions with other drivers.
Insurers care much more about the make and model: aspects of the car that may actually affect your safety and, consequently, your premiums.
If your neighbor’s tree falls on your house or yard, your neighbor pays
This one can be tricky, but in most cases your insurance pays for any damage – minus the deductible.
You would file a claim through your insurance. The tricky part comes if the tree is diseased or otherwise weakened – and you can document that you warned the neighbor.
In that situation, the neighbor could be responsible for the damage.
Home insurance will pay for any natural disaster damage to your home
It’s easy to assume that your house receives insurance protection for any event. Home insurance does, however, have restrictions and exclusions.
Two major causes of damage that don’t receive coverage – floods and earthquakes.
If you live in or near a floodplain, consider purchasing a separate flood policy through the National Flood Insurance Program.
If you live near a fault line or your area has a history of earthquakes, you can purchase an earthquake endorsement or separate policy.
All your home’s contents are covered under home insurance
If you only purchase standard home insurance coverage, you could leave your high-value possessions (jewelry, art, sports equipment, electronics) unprotected or at least underprotected.
Carriers set strict limits for high-value items. Sometimes, these limits can be as low as $200.
If you have high-value items in your home, you can fully protect them by purchasing an endorsement, fine arts floater, or collectibles policy.
The good news?
Those items can receive protection even if they become damaged or stolen when stored outside of the home.
You aren’t legally responsible for a trespasser on your property
You may know that you can be held responsible for injuries sustained by guests on your property.
You may not know about your responsibility for injuries sustained by uninvited guests on your property as well.
If you have a pool, trampoline, or other “attractive nuisance” on your property and don’t protect it properly, you could be liable if something goes wrong.
Inform your carrier of all such items on your property so that you can determine your responsibility and plan appropriate safety measures.
Understanding the complexity of home and auto insurance can be difficult.
These are just a few ways perceptions can be muddled with regard to your protection.
Familiarize yourself with the insurance basics to make sure you’re covered both at home and on the road.
Better yet, dig out your policies and go over them carefully.
If there’s anything you don’t understand, ask your agent for clarification. Don’t get caught off guard by a problem with your policy when you really need it.
Photo credit: Giovanni ‘jjjohn’ Orlando via photopin cc
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