4 Home Insurance Myths You Shouldn't Believe

Property owners need to be sure they have the right homeowners insurance in place. Unfortunately, not having sufficient coverage could be devastating to their savings account balances -- and many people don't realize they aren't fully protected. 

One big reason why people make mistakes with their insurance is because they buy into myths. This could have devastating financial consequences, so every property owner should be sure they aren't operating under these four misconceptions. 

1. Workers who come to your home are always covered 

Most property owners hire someone to do work on their place at some point. And, when they do, they put themselves at potential risk if something happens to the visiting worker.

Sadly, some homeowners believe that a worker's own insurer would always cover their damages. And, indeed, this can be the case in certain circumstances. For example, if a homeowner hires a licensed carpenter to do some home upgrades, that contractor should have insurance in place -- and their insurance should cover them if they're harmed. A homeowner will want to check that, though, to be sure they aren't hiring someone without the right protections. 

Homeowners are not only responsible for injuries to uninsured professionals, but they can also be responsible for losses even insured professionals experience if those losses occur due to some defect in the property or equipment -- such as a faulty ladder the owner offers to the contractor.

Plenty of other workers may also not be insured, ranging from babysitters to a teenager who mows the lawn. It's very important to be sure that every homeowner has sufficient liability coverage in place to pay for any damages that these visiting workers may experience. Typically, it's a good idea to buy a minimum of $300,000 to $500,000 in liability coverage, but homeowners with substantial assets that would be at risk in a lawsuit may want to buy more protection. 

2. Mold is always covered by homeowners insurance 

Dealing with a mold problem could cost an average of $3,500. Unfortunately, home insurance rarely covers mold-related issues. If the mold was directly caused by a covered peril such as a pipe bursting, then it could be paid for. 

But if it happened due to deferred maintenance over time, such as occurring because a toilet was leaking under the floor, then home insurance would provide no help at all to pay the bills.  It's important to be aware that mold -- and other maintenance issues -- won't be paid for, so homeowners should maintain a special savings account dedicated to dealing with these kinds of problems if they arise. 

3. A lender will make sure coverage is sufficient 

Some homeowners also believe that their mortgage lender will require the coverage they need. This isn't the case, though. Lenders do require homeowners to have a certain minimum amount of dwelling coverage (usually, enough to rebuild the home in the event of damage). But lenders don't care how much, if any, personal property protection or liability coverage a property owner has since lenders only focus on protecting their own financial interest in the house.

Property owners will need to decide for themselves how much coverage they need, taking into account the value of their personal property and the risk to their assets if they are sued. 

4. Water and flood damage are treated the same

Finally, some homeowners don't realize only certain kinds of water damage are covered. For example, if a home floods because of a burst pipe or broken refrigerator water line, home insurance will cover that. But standard home insurance policies always exclude flood damage resulting from acts of nature.

Any homeowner who wants to be protected in case their home floods due to weather should make sure to put a separate flood insurance policy in place. 

Understanding the truth about these four myths could help homeowners avoid unexpected financial disasters. With this knowledge, every property owner can make sure to get the coverage they need from one of the best home insurers before something goes wrong.