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Don’t believe any of these misconceptions.

Key points

  • Insurance is an ongoing expense that every homeowner should consider.
  • It’s important to understand what these policies will and won’t cover, and how to save money by getting one.

If you are financing the purchase of a home with a mortgage, know that your lender will ask you to take out home insurance. But even if you buy a house with cash or own your house, home insurance is always an essential thing to have. Without home insurance, you could end up with a host of devastating bills in case your property is damaged.

That said, there is a lot of misinformation regarding home insurance. So whether you’re buying a policy for the first time or you’ve had one for years, here are some big home insurance myths you shouldn’t let yourself get carried away with.

1. Home insurance will cover any repairs you need

You might assume that any little thing that goes wrong with your home will be covered by your home insurance policy. But in fact, that’s not how home insurance works.

The purpose of home insurance is to protect you against unforeseen damage. But home insurance will not cover the cost of problems that arise due to wear and tear.

So, let’s say your roof is damaged by a windstorm. This is the kind of repair that may qualify for coverage. But imagine that your heating or air conditioning system stops working after several years. This is something that tends to happen over time, so you shouldn’t expect your home insurance policy to take on a new note.

In fact, you’ll often hear that it’s important to maintain a strong emergency fund as a landlord to cover home repairs. One of the main reasons is that your home insurance policy may not cover as many issues as you think.

2. Your home policy fully protects you in the event of theft

Home insurance policies usually include a theft coverage component. But there may be a limit on how much your policy will pay per item.

Let’s say you own a lot of expensive artwork. Your policy may have a limit of $1,000 per stolen or destroyed part. If you have a piece of art worth $5,000, you could lose $4,000 if someone breaks into your home and walks away with it.

That’s why it’s so important to understand the limits of your coverage under your policy. In some cases, he might make sure to purchase additional insurance for items that aren’t covered by your policy’s standard reimbursement.

3. It’s best to stay with the same home insurance company for life

You might assume that if you’ve used the same home insurance company for years, keeping your coverage with them will result in the lowest premium costs. But this is not automatically true.

Home insurance companies do not always reward policyholders for their loyalty. And if your premium rates keep going up, it pays to shop around with different home insurance companies and see if there’s a better deal out there.

Home insurance is a necessary expense – and it’s an expense you need to fully understand. So the next time you come across these myths, don’t believe them.

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