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Don’t believe everything you hear about insurance coverage. For example, driving a red car does not raise your insurance rates. And your landlord’s insurance will not cover your belongings if they’re stolen.
Insurance may seem complex, but it’s not hard to get clear on the basics. Simply talking with your insurance agent can go a long way.
It’s crucial to separate fact from fiction so you can have the right insurance coverage to deal with potential losses.
Here are some common insurance myths and the facts from AAA insurance experts.
I have a home insurance policy, so I have all the coverage I need. – FALSE
Some policies don't provide a high enough limit to fully rebuild your home in case of destruction by fire or other disaster. And building materials and construction are often in great demand after a disaster, pushing rebuilding costs even higher. Talk with your agent to make sure you have adequate coverage.
My home insurance covers all disasters likely to happen in my area. – FALSE
Standard home insurance covers disasters such as fire, lightning, theft, vandalism and damage from smoke, water and wind. It does NOT cover damage caused by flood or earthquake. Flood and earthquake coverage can be purchased separately.
All of my valuables will be covered by homeowners insurance in the event of a burglary. – FALSE
There are limits on the amount of coverage you receive for valuables such as jewelry, antiques, business property and art, but you can purchase endorsements that will add extra protection.
The color of my car affects my auto insurance rate. – FALSE
Many factors – including a vehicle’s model, make, year, and the driver’s experience and age – may impact your auto insurance rate, but the color of a vehicle is not one of them.
A stay-at-home spouse does not need life insurance. – FALSE
A spouse who stays at home may take care of children, chores and transportation. In the unfortunate event of death, these would become expenses that could be offset by the proceeds from a life insurance policy.
I don’t need renters insurance because my landlord is covered. – FALSE
Your landlord’s insurance typically covers the building; it does not cover your personal property. You may also be liable for any structural and/or water damage that you cause. In addition, renters insurance covers your liability in case a guest in your rented home or apartment is injured.
It is possible to have too high a limit for homeowners insurance coverage. – TRUE
Some mortgage companies may try to require new homeowners to purchase insurance for the entire loan amount, which can be more than the replacement cost of your home. It is only necessary to cover the replacement cost of the home; land does not need to be insured.