by Susan Mcdaniel

Created on: October 09, 2009   Last Updated: November 05, 2009

Consumers don't seem to know what home insurance is, why it is needed, what it covers, or what questions to ask an insurance agent. Debunking the ten most common home insurance myths should help make the issue easier to understand for the average home owner.

Myth#1: I have to insure my property for the full purchase price.

The full purchase price of your property includes the land and other items (swimming pools, for example) that your home insurance policy should not include. Use your home's square footage and the local building costs to approximate what it would cost to rebuild your home and insure for that amount.

Myth #2: I don't need flood insurance. I am not in a flood zone.

The National Flood Insurance Program website says "everyone lives in a flood zone." In fact, 1/3 of claims made last year were by residents from low-risk areas. Get flood insurance no matter where you live, but be aware that it takes 30 days after purchase for your flood policy to take effect.

Myth #3: My belongings will be replaced.

They will be replaced if you can prove you owned them, their value, and you have a "replacement value" policy as opposed to a "cash value" policy. Make a thorough inventory with purchase dates, receipts, prices, a video of each room and its contents, as well as every drawer and closet. Then store those documents away from your home in a safe place.

Myth #4: My valuables will be covered if they are stolen or destroyed.

Valuables are usually covered up to some minimum value which is quickly exceeded. Expensive jewelry, coin collections, furs, electronics, and guns must be separately appraised and insured with individual endorsements.

Myth #5: Home insurance will cover a backed up sewer line or break in a water main.

Most policies require an additional fee before they will pay for damages caused by backed up water and sewer. Flood insurance does not cover this. Check your particular home insurance policy. This coverage is an inexpensive add-on and well worth the money.

Myth#6: My insurance covers termite damage.

Simply put: No, it doesn't.

Myth #7: My premium will be much less if I raise the deductible.

Sometimes the difference between a $500 and $1000 deductible isn't that significant, however, you don't want to be making claims for minor damages. That behavior really will run up your premium.

Myth#8: My empty home (whether unrented, a vacation home, or one for sale) is fully insured.

Insurance companies require a special type of insurance for properties that are unoccupied. Discuss this situation with your agent and do not assume your regular policy will be in effect if the house is unoccupied.

Myth #9: Renters don't need home insurance because a landlord's insurance will cover everything.

A landlord's insurance covers the unit the landlord owns, not a renter's belongings or a renter's liability. Get renter's insurance. It's inexpensive and worth the peace of mind.

Myth #10: Home insurance is too complicated to ever understand!

Rely on the experience and expertise of your insurance agent to guide you through the maze of available options and get the coverage you need. Your agent can help simplify a complicated issue and debunk the myths associated with home insurance.

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