Natural disasters can hit anytime. These homeowner’s insurance myths about natural disasters can help you to understand your policy in a right manner.
Homeowner’s insurance (HOI) is also known as home insurance or hazard insurance. It is one of the most significant types of policy needed to protect your home, belongings, family & valuables.
This policy is quite helpful in the event of unexpected events such as accidents, vandalism, theft or even natural disasters.
But, like other policies, it’s also having some limitations & restrictions or exclusions. This inturn need to be understood before you buy right home insurance policy for your needs.
You may have developed some wrong assumptions or myths about this policy coverage perhaps due to its popularity. But, it can cost you tremendously during natural disasters. Here are 5 homeowner’s insurance myths about natural disasters:
(1) Your Standard Home Insurance Policy Covers Flood Damages
It is one of the most common homeowner’s insurance myths about natural disasters. Your home & personal property can be damaged to significant levels due to floods. These flood related damages may occur due to hurricane, heavy rains, burst pipes, or sewer backup.
Sometimes, your homeowner’s insurance policy may cover flood damage to limited extent only. It is particularly true if flood occurred accidentally due to owner or guest of the house.
For example, if overflowing of bathtub occurred accidentally resulting in damages that may be covered by your policy. However, if the damage is due to excessive downpours then your policy will not cover such damages.
But, most of the standard home insurance policies or plans usually exclude flood coverage completely. Therefore, you need to purchase a separate flood insurance policy that is usually underwritten by National Flood Insurance Program (NFIP).
You mortgage lender may ask you to buy it especially if you are in flood susceptible zones. It can be purchased by homeowners, renters & even condo owners.
It typically covers the actual cash value of your real estate or property which in turn is the value of possessions needed to replace them minus depreciation cost.
[Read Also: 15 Common Home Insurance Myths About Policy Coverage]
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