A home is probably the largest purchase you’re ever going to make. You want to protect your investment, right? That’s why you buy home insurance. In fact, your lender will likely require you to do so; the lender wants to protect its investment, too.
But misconceptions about home insurance abound, and I love this article from Realtor.com that seeks to dispel them. Let’s take a look at a couple of the biggest ones:
Myth: It’s a rip off.
Home insurance costs vary based on your home’s location, size, and other factors. On average, a policy costs about $952 a year, Realtor.com reports. That’s an extra $79 a month added to your housing budget, and you can probably think of lots of ways you could spend $79 a month.
But consider this: The average home insurance claim in 2014 was $9,779 – the average soars to $39,791 on a fire claim. Do you have that kind of cash lying around? Without home insurance, you could go deep into debt – or worse – when disaster strikes.
Myth: Home insurance includes flood coverage.
Don’t believe this myth – especially if you live in a flood-prone area. As a general rule, home insurance policies do not include flood insurance. You’ll need to purchase a separate policy to be covered in the event of flooding. Owners of homes in flood-prone areas are likely to be required to buy separate flood insurance.
Myth: My home business is covered.
Home insurance covers your home and your personal property. Items and liability related to a home-based business will not be covered by your home policy. You’ll need a separate policy to cover business liability and equipment. Ask your insurance agent about adding a business rider to your existing home policy.
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