There’s a lot of “Fake News” out there nowadays. Insurance is no different. Lots of information that you’ve heard about insurance isn’t true. Example: It costs more to insure a red car. Not true!
Here are some busted myths to help you make sounder and more informed decisions when purchasing insurance.
MYTH: The insurable value of my home is based on its market value.
BUSTED! Your home should always be insured for its replacement cost; the cost of labor and materials to rebuild your home. The market value, the amount you paid for the home, can fluctuate based on the real estate market, location, and many other things that won’t affect the cost to rebuild your home.
MYTH: Your homeowners insurance extends to your home-based business.
BUSTED! Many people who are working or operating a business from home assume that their homeowners insurance coverage also extends to business operating supplies and equipment in case of loss or damage and premises liability. Well, this is definitely NOT the case. A homeowners policy is a personal policy not designed for business exposures. You may need an endorsement added to your homeowner policy or even a small commercial policy.
MYTH: All of my home contents are covered by my homeowners insurance policy.
BUSTED! Homeowners insurance policies cover personal property to some extent, but this does not mean that everything you own is covered. There are limits to your coverage.
Insurance companies put a cap on how much property coverage you can have. They also limit the amount of coverage on unique items such as jewelry and valuable art pieces, just to name a couple. If you have many precious belongings to protect, consider purchasing additional insurance for these items.
MYTH: My homeowners insurance will cover flooding.
BUSTED! Whether you live in a flood zone or not, you may believe that your homeowners insurance policy will cover your home after a flood. Unfortunately, this is a myth. Homeowners insurance doesn’t cover damage caused by a flood. Homeowners and flood insurance are actually two separate insurance policies, so you must purchase flood insurance separately if you want to be covered.
MYTH: If I get mold or termites in my home, my homowners insurance will cover the damage.
BUSTED! Homeowners Insurance covers damage from sudden and accidental causes. Preventable causes are typically not covered, or at least not covered entirely. With mold and termites, focus on prevention. You’ll potentially save thousands of dollars by identifying these problems early and avoiding costly repairs.
MYTH: Your personal auto insurance policy covers you while you’re driving for a rideshare service.
BUSTED! Personal car insurance does not cover driving for a rideshare service. In fact, even if you don’t have a passenger in your vehicle yet, you may be underinsured while you have the app turned on and are waiting for someone to request a ride.
MYTH: Your insurance covers all injuries and accidents that take place within the property.
BUSTED! While your policy does come with liability coverage, it has its limitations. For one, accidents and injuries are only covered when they happen to other people. If you or your family members get hurt at home, you’ll have to use your health insurance coverage for the treatment or pay for it out-of-pocket.
MYTH: If another person drives your car, in the event of accident, his or her auto insurance will cover the damages.
BUSTED! In most states, the auto insurance policy covering the vehicle is considered the primary insurance. This means that the car owner’s insurance company must pay for damages caused by an accident, regardless of who is driving. Policies and laws differ by state, so make sure you understand the rules before allowing another person to drive your car.
MYTH: Personal auto insurance also covers business use of your car.
BUSTED! If you are self-employed and use your vehicle for business purposes, personal auto insurance may not protect you so it’s important to make sure your company is rating for the proper use or you purchase business vehicle insurance.
MYTH: My business is too small for cybersecurity risk.
BUSTED! Chances are that your company has a website and that you store digital customer information on local or remote servers. Even if you’re not offering ecommerce functionality or casting a wide digital footprint, your business data is at some degree of risk. Your systems, however small, are penetrable. If they are found in the wrong hands, and if you are without appropriate insurance coverage, your business could face significant losses.
MYTH: The life insurance coverage I get through my employer is enough.
BUSTED! The list of your benefits at a new job may include life insurance. That’s good news. However, it’s also important to know when your coverage begins, the dollar amount of the coverage, and the policy’s duration (time frame). And what happens to the coverage if you leave, retire or (eek!) get fired?
MYTH: Life insurance is expensive.
BUSTED! Consumers misjudge the price of term life insurance, according to a 2020 Insurance Barometer Study by LIMRA, a worldwide insurance-industry research organization, and Life Happens, a nonprofit educational organization concerning insurance and related products. According to the study, consumers have consistently overestimated the cost of life insurance. The study shows more than half of Americans estimating the cost of a term life insurance policy at more than three times the actual cost. Younger Americans are likely to estimate the cost to be as much as five times the actual cost.
What’s the reality? Not all life insurance policies are created equal and some are more affordable than others.
MYTH: My homeowners liability will cover the bodily injury if my housekeeper gets hurt at my home.
BUSTED! Okay, not all of us have this concern but some do! If you’re a high net worth person you may have a housekeeper, a maid, a nanny or even a butler. or a nanny. Most states require household employers to carry Workers' Compensation insurance for their household employees such as a nanny, senior caregiver or housekeeper. ... If you don't have a workers' compensation insurance policy, you will be personally liable for your injured employee's expenses and your homeowners liability may not respond.
Hopefully we’ve kicked some false info to the curb. If you want more information about any of these, call us! Helping you be “in the know” is part of us being your agent.