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Thursday, May 08, 2008

Common Home Insurance Coverage Misconceptions

I’m constantly amazed (and I don’t know why still) at how many people don’t know what’s covered and what’s not covered under their homeowner policy.  When someone calls us for a quote, I have a list of questions to go through to make recommendations and make sure someone isn’t paying for something they don’t need or want.  Often people tell us they have something covered and then when I point out in their policy it’s not, they’re shocked.  Here are a few of these common items that are NOT covered under your home insurance policy:

  • ATVs & motorcycles. They have their own policy.  There isn’t any coverage for these on your home insurance, even when they’re parked in your garage.  If they’re stolen, you’re paying out of pocket to replace them.
  • “Replacement cost” on home.  Chances are you’ll never have a total loss of your home.  If you do your home insurance will only pay up to the ‘dwelling’ limits plus a little extra, usually 20%-50%, to replace your home.  Anything above and beyond is your responsibility.  There are a few companies that offer guaranteed replacement cost but most people don’t have it, ask your agent if it’s available.
  • Boats. They have their own policy, and are in the same category as ATVs & motorcycles above but you may have up to $1500 in coverage depending on the insurance company.
  • Home based business.  If you’re self employed and have business “stuff” at your home, there is very little coverage for the “stuff.”
  • Jewelry, silverware, guns.  There is a small amount of coverage for these items for theft in the basic homeowner policy.  It’s usually around $1000-$1500 max.  If you have more you can increase the limit or buy a ‘floater’ policy.
  • Building code.  Your home policy says it will replace the home to similar construction standards when it was originally built.  Older homes were built with older building codes.  If your home is a total loss, and in some partial losses, you’ll have to pay the increased to upgrade your home for the new building codes.  For example, Scottsdale requires fire sprinklers in all new homes.  You would have to pay to put the fire sprinkler system throughout your home.

There are many other small items that aren’t as common but may affect you.  Call your agent.  Ask what’s covered and what’s not covered.  If there’s something you’re afraid of losing, ask your agent.  Remember, the cost of insurance is the premium you pay plus the cost of any unpaid claims.

Matt Fox of Fox Insurance Services, LLC in Mesa, AZ     Written By:  Matt Fox
President  - Fox Insurance Services, LLC

(480) 699-7222


Click Here for an “Instant Callback” to speak with our office about your protection!

Posted by Matt Fox on May 8, 2008 | Permalink


Lists like these can be very useful. People do not always make the effort to ask their insurance agent or read their contracts in order to find out what is and isn't covered. And when something happens they end up pennyless, angry and disapointed. As a realtor, more specific a Toronto real estate agent, I feel personally responsible for interesting people in their insurance policies. People should care more. Thier houses or condos should be insured the right way.

Posted by: Toronto real estate agent | May 19, 2008 2:03:02 AM

This is very useful information - most people are very clueless about what is covered and what is not and what overlaps. It always surprises me how insurance is usually the least of most buyer's concerns.

Posted by: Chelle | May 25, 2008 6:06:16 PM

Great info. I was not aware that home owners insurance would not cover ATV's, especially if they are in the garage. That seems weird to me but thats what you get from insurance companies.

Posted by: Sell My House | May 28, 2008 1:32:28 PM

Thanks for the info, I found your Post very helpful.

Posted by: Bucharest property | Jun 17, 2008 3:06:22 AM

Thanks for the detail

Posted by: Latin american property | Jun 19, 2008 1:38:33 AM

That is some great information. I will pass this information onto my clients.

Posted by: Charleston SC real estate | Sep 5, 2008 8:58:34 PM

Some great information for everyone, thanks for the good blog. I'll be following it regularly

Posted by: Myrtle Beach Real Estate | May 20, 2009 7:33:01 AM

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