Being Prepared for a Natural Disaster Includes Understanding Your Homeowner's Insurance
The biggest reason that half of all homeowners are underinsured is that people have no idea how their insurance will work in a major loss. Take time now to learn how much coverage and what kind of documentation you'll need to collect ... it will make the long road to recovery much less painful to travel down. The best way to do this: get a copy of Surviving Wildfire.
Myth 1: If I suffer a total loss, I’ll automatically get a total payout
You may eventually get a total payout, but it won’t be automatic. You’ll have to document and value your home and everything you lost.
Myth 2: All homeowners’ insurance policies are basically the same
Nope. Homeowners’ policies vary widely. Some provide replacement cost, some only actual value at time of loss. Some don’t cover additional living expenses at all; others have different time and dollar limits. Some require you to rebuild on site; some don’t.
Myth 3: Coverage should be based on the market value of my home
One of the most costly mistakes you can make. Coverage should be based on the cost to rebuild your home from the ground up.
Myth 4: My insurance company knows how much coverage I need
Insurance companies use standard formulas that seldom account for custom features, upgrades, local construction costs and many other things.
Myth 5: If I own my home outright, I don’t need insurance
Only if you can truly afford to walk away from your home and everything in it. Otherwise you want to be insured for the actual cost to rebuild your home and replace all your belongings.
Myth 6: If I rent, my landlord’s insurance will cover me
Your landlord’s insurance only covers the structure; you need renter’s insurance to cover everything you own.
Myth 7: The only way to save money is to shop for the lowest premium
There are lots of ways to save money on your insurance without scrimping on your coverage, including increasing your deductible, bundling your policies and installing things like smoke detectors.