Business insurance, home insurance, auto insurance, health insurance, renters insurance and more — All of these types of policies might apply to your situation, but do you really know what is true and what is a myth for each kind? Below we examine some common misconceptions and clear up the truth!
Fiction: I don’t need flood insurance, floods never happen near me! — Homeowners in urban areas tend to be the most vulnerable to this myth. Many feel that unless their home is on a river or near a busy waterway flooding cannot happen to their home. However, climate change, bringing stronger and more unpredictable storms, has proven otherwise. In January of this year a busy urban area of San Diego nowhere near the San Diego River experienced catastrophic flooding during a torrential downpour, with hundreds of residents displaced for months. Your standard homeowners insurance usually does not cover flood when it comes to water damage. Review your policy with your agent and determine if you should have a Flood Insurance policy in place.
Fact: Renters Insurance is important even if you don’t have a lot of possessions to replace — Unfortunately, we live in a litigious society. Renters Insurance is critical to protect not only your assets but to shield you from liability. Even if you don’t own the place you are living in you can be sued for claims related to injuries on site, animal bites, neglect and more. Your financial health is at risk when facing a lawsuit targeting your liquid net worth.
Fiction: Health Insurance covers all your care needs, everywhere — One of the biggest misconceptions people have about their health insurance is what it covers and when. Almost all policies have very strict coverage regulations when it comes to out-of-network care and your responsibility — This includes when you are traveling outside the United States. Carriers are unlikely to cover your medical needs, treatment or transportation costs if you require care internationally. If you frequently are out of the country for work or pleasure, investigate international medical policies specifically geared to leisure travelers, ex-pats or students. Be sure to check with your employer or school about any international coverage you may be entitled to and fill the holes with your own international coverage plan.
Fact: Many policyholders overlook potential discounts — All types of policies, from personal auto to business liability, often have opportunities to save through discount or bundling programs. For example, installing upgraded fire detection and defense systems may lower your premium when it comes to insuring your commercial structure. Taking a safe driving course can lower auto premiums. Spend a little time with your broker or agent to review all your policies and identify any discounts you are missing — they can add up!
Fiction: Your policy always covers the full cost of replacement — Homeowners and Renters policies are designed to provide financial compensation in case you ever need to replace items in your home due to fire, theft or other covered loss. However, your policy doesn’t necessarily automatically come with “Replacement Cost” coverage — meaning the cost you would have to spend today to replace an item you already had. For example, a kitchen fire may result in destruction of your range, hood and other appliances. If you purchased those items several years ago, and your policy just covers “Actual Cash Value” (meaning what you paid to acquire the items), it is likely going to cost more than what you paid in the past to purchase new versions. To mitigate your out of pocket costs when rebuilding from a loss, talk to your agent to review whether you need “Replacement Cost” coverage and which option is best for you.
Fact: The cost of Homeowners Insurance should be a consideration when buying a property — When shopping for a home and getting pre-qualified for a loan, you may be tempted to determine which properties you can afford based on a monthly cost only tied to principal, insurance and homeowners association dues. However, the monthly cost of a Homeowners Insurance policy absolutely must be part of your budgeting process, especially in areas that may face higher premiums due to wildfire risk. Get a realistic quote on a policy to insure your property before you finalize your negotiations and be prepared for that number to fluctuate with rate changes.
Fiction: My business is too small to need insurance — This is one of the most dangerous myths to fall for! Any business is susceptible to liability, no matter the size or number of employees. You may feel you are safe because all your work is done under contracts with specific provisions, or that your employees are all covered under an employment agreement — but that’s a myth! An important part of protecting your success is covering your assets and infrastructure against loss or liability claims. Start from the beginning with a knowledgable broker to ensure you have the coverage you need and adjust as required as you grow.
