Paying for home insurance can lull you into a false sense of security. Once you’ve invested in home insurance, it’s easy to think that your home is protected in its entirety, but if you haven’t read the fine print, you may not be as protected as you think.
Although most home insurance policies offer broad coverage, namely for your belongings, home repairs caused by particular perils and theft, they are not a catchall safety net for any disaster. Many policies have expensive coverage gaps that could catch you out on a rainy day.
Three of the most common and expensive coverage gaps hiding in home insurance policies are natural disasters, flooding and high-value personal items. To avoid unexpected claim denials and help keep your home protected in every eventuality, there are optional add-ons and maintenance rules that make your policy more robust.
Discover the most common home insurance myths and find out which add-ons are worth your investment to protect your home, belongings and financial health.
Myth #1: Standard Policies Cover All Water Damage
It is a common misconception that standard home insurance covers all types of water damage in a home — but, as many people find out the hard way, that is not the case.
Although most policies typically cover sudden and internal water issues, such as a burst pipe or an appliance leak, they almost always exclude coverage for water damage that comes from outside the home. Generally, while most home insurance policies cover damage caused by falling water, you will require separate flood insurance for rising water issues.
For example, if you have a standard policy, your insurance company will probably not fork out for water damage caused by:
- Storm surges
- Sewer backups
- Rising rivers
- Flash floods
- Gradual damage
- Groundwater seepage
- Ice dams
While homeowners located in coastal areas might be more inclined to invest in separate flood insurance, thunderstorms and flood damage pose a significant risk to homeowners nationwide, regardless of their proximity to the coast.
The only way to ensure your home is covered for all types of water damage is to check your policy and purchase the necessary add-ons.
Myth #2: If Your Pipes Freeze, You Are Automatically Covered
The question is not whether home insurance covers damage caused by frozen pipes, but rather in what situations does your policy cover it.
Most standard policies cover sudden, accidental frozen pipes that burst, provided the homeowner has undertaken the required preventive maintenance to keep the house adequately warm and pipes insulated. However, if you have not properly maintained your home or have been negligent, your insurance provider is unlikely to cover damage caused by a burst. For example, if an insurance adjuster discovers that your heating was turned off when your pipe burst, your claim could be denied, and you may have to pay for repairs yourself.
Here are some steps you can take to demonstrate reasonable care to insurers:
- Keep your home heated: Maintain temperatures of at least 55° Fahrenheit throughout your home, even when you are away or the house is vacant.
- Insulate your pipes: Particularly in unheated areas of your home, such as your basement and attic, you should insulate your pipes with foam tubes, rubber insulation or fiberglass wraps.
- Act quickly: Shut off your water as soon as you notice a frozen pipe to prevent it from bursting and causing further damage.
If you want to ensure all future frozen pipe claims are accepted, check your policy terms and maintain proper care of all your home’s pipes.
Myth #3: All Policies Pay to Replace Old HVAC and Appliances
While home insurance policies generally cover sudden or accidental damage to heating, ventilation and air conditioning (HVAC) appliances, most insurance companies will not cover general wear and tear or replace units that fail due to old age.
For example, home insurance generally covers HVAC damage caused by:
- Lightning strikes
- Falling objects, such as a tree
- Storms
- Sudden water damage
However, most home insurance policies won’t cover HVAC replacement costs for units with expired warranties or that have ceased working due to general use.
If you want coverage for mechanical failures or aging units, consider investing in appliances with competitive, long-term warranties, as general home insurance is unlikely to cover them. Alternatively, consider investing in specific equipment breakdown or service line coverage to bridge the gap and help you avoid expensive warranties and replacement costs.
Myth #4: Home Insurance Covers All Your Valuables
If you’re lucky enough to possess valuable jewelry, art, high-end electronics or other luxury items, they are unlikely to be adequately covered by your standard home insurance. Most policies have limited payout caps for individual items, which may not cover your items’ total value.
Many expensive items require separate riders or add-ons to be fully insured in the case of theft, damage and other emergencies. Common exclusions in home insurance policies include:
- Expensive engagement rings and other jewelry
- Collectibles, such as rare coins and card collections
- Fine art
- Antiques
- Precious metals
- Luxury items, including designer handbags and clothing
Even with appropriate add-ons, many homeowners fail to accurately list their possessions after a fire or burglary, which can lead to lower payouts and denied claims. To help make sure you receive full compensation in emergencies, consider keeping a digital inventory of all your valuable belongings with independent coverage terms.
Myth #5: Umbrella Insurance Is Only for Millionaires
There is a common misconception that umbrella insurance is only for the wealthy. Liability coverage is actually a smart and affordable insurance addition for anyone who wants to protect their assets beyond their standard policy’s limits.
Umbrella insurance can cover a range of things, including:
- Personal liability issues, such as slander and libel
- Legal costs
- Medical bills resulting from injuries you cause to others
- Property damage you cause to others’ belongings
Protection against large liability claims can save you money in the short term, as well as help secure your future wages. Umbrella insurance policies can protect your future earnings by providing an added layer of security and liability protection, helping prevent court-ordered wage garnishment and asset liquidation.
How AAA Home Insurance Closes the Gaps
At AAA, we offer personalized policy reviews to identify gaps in your home insurance policy and help keep your assets protected at all times. With our bespoke approach, our risk advisors can explain which flood, personal belongings and other specific add-ons will augment your home insurance.
Don’t wait for a claim to find out what isn’t covered. Schedule a complimentary insurance review with a AAA Central Penn agent today to secure your home and financial future.
