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"Defining" Moments with Sherry: Biggest Misconceptions of Insurance

Toy house in the palm of a hand

  1. “Your insurance company covers all of your personal property.” This is incorrect; your insurance company will pay only for items damaged by a named peril on your policy. Your policy may also have a lower limit on certain items. For example, you had $500 in coins stolen from your home the company may only pay you up to $100 for the stolen coins, unless additional coverage is added (scheduled).
  2. “Your homeowners insurance will pay for mold damage.” If the damage is caused by a named peril it may be covered, but if you neglected to fix a leak in your home which causes mold there will not be coverage.
  3. “Your insurance policy will cover flood damage.” A flood is not covered under your homeowner’s policy; you need to buy a special flood insurance policy provided through a government program. You can find more information at www.floodsmart.gov. Did you also know that, if ground water starts seeping into your basement and damages your furnace or hot water tank it would not be covered?
  4. After reading #3 you are probably now thinking “There is no coverage at all for water in your basement.” Well, if you have the added water damage coverage (ML-72) on your policy you do have coverage if your sewer backs up or sump pump fails, but only if you have that endorsement. You may also have coverage for sudden and accidental discharge, like if a pipe bursts.

Any of these coverages could be subject to policy exclusions, so the best thing to do is to read your policy completely and if you do not understand it talk to your agent. They are the ones that write your coverage and know your exposures the best. If you think there may an exposure and you don’t think it is covered on your policy, your agent may be able to add an endorsement or write a separate policy to ensure you have the coverage you need.

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