3 Common Insurance Misconceptions

by Ryan Hanley
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Insurance is often discussed with a disdain only a Repo Man can admire. Unfortunately for the passionate insurance Haterz out there, much of the negative emotion surrounding insurance is based on misconceptions. The following is a list of three (3) common misconceptions about homeowners insurance:

  1. Insurance Companies are Out to Get Me!
    • WRONG.  You as an insurance consumer pay a fee for a service.  Just because you don’t take the time to understand that service does not mean that the insurance industry is out to screw the American public.  This isn’t 1800′s.  No one is holding a PotLuck House Raising for you if your house burns down. Take the time to make sure your house is properly insured and the insurance will help you put it back up.
  2. I Have Homeowners Insurance, If there’s a Flood I’m Covered!
    • WRONG.  Flood Insurance is a separate policy.  Let me say that again, FLOOD INSURANCE IS A SEPARATE POLICY! Don’t end up like so many people that live near rivers, lakes, streams, cricks, swamps, bogs, whatever… If water seeps into your house through the foundation or spills over your foundation YOU ARE NOT COVERED UNDER A HOMEOWNERS POLICY!  You need a National Flood Policy.  Go to this link for FEMA and find out if you live in a Flood Zone.
  3. I’ll Call the Insurance Company It’s Just Mold!
    • WRONG.  Mold is excluded specifically on all typical homeowners insurance policies.  This is why you mustn’t wait to get pipe bursts, water-backups, or rain damage cleaned up.  Mold can ravage both the house and its inhabitants.  Furthermore, depending on the level of Mold outbreak you have it can be costly to destroy.

Don’t fall victum to these widely held misconceptions.  Understand your insurance policies and know where you and your family are at risk.  According to G.I. Joe that’s half the battle.

What other common misconceptions can you think of?

Disclaimer:

This article is for informational purposely only. There is no legal advice being suggested or proffered and the author assumes no responsibility or liability for the actions take or not taken by the readers based upon such information.

Thank you,

Ryan H.

For more information on increasing your insurance acumen, subscribe to the RSS Feed or my Email Newsletter. Follow me on Twitter, connect to me on LinkedIn, or Like the Albany Insurance Professional on Facebook.

If you would like to discuss receiving a proposal for either your personal or business insurance program email me, or call me at (518) 456-6688.

Read my syndicated post on Health Insurance originally published to Under30CEO.com 4 Pieces of Advice on Health Insurance for Entrepreneurs.

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About Ryan Hanley

I passionately believe learning to effectively communicate online will help each of us to become the best version of ourselves...

  • http://www.ryanhanley.com/about Ryan Hanley

    The previous comment is courtesy of Michael McPherson. Mick can be reached at mmcpherson@emerywebb.com. For more on Mick check out http://www.emerywebb.com.

  • http://www.ryanhanley.com/about Ryan Hanley

    At the end of your article you asked what other common misconceptions there are.
    A very good one is that Ordinance or Law coverage is nothing more than an expensive extra coverage. WRONG!! Much of the code enforcement in the state of New York's townships didn't begin until the late 1960's. As a result many homeowners could be caught with their pants down in the event of even a PARTIAL loss. Outer wall construction on most homes up to that point was two x four construction. Subsequent code changes now require two x SIX construction if you would of course like to have a CO for your reconstructed home. I have heard stories of folks who did not have this coverage and in a partial loss they came up $ 12,000 to $ 15,000 short during reconstruction.
    As well, most towns require complete & entire reconstruction for dwellings that have experienced a loss of 50% or greater…meaning you'll have to attempt to rebuild an entire home with maybe only half of your coverage due to the State regulations preventing the carrier from enriching the client. In a nutshell, if you have a 50% loss the carrier can only pay you based on that amount of loss. But the township may very well tell you that you MUST rebuild the entire dwelling. Ordinance or Law coverage is the only coverage that will save the client from these types of occurences.
    As many clients will request cheap coverage I will explain to them that it is what it sounds like…CHEAP!! Meaning at claim time they could potentially suffer at bare minimum unexpected extra expense. Value is constantly overlooked and/or ignored. There is no merit in selling a homeowners policy without this coverage. At bare minimum, should you have no choice but to sell the client the cheap stuff, have them sign off to say that you explained and offered them the correct coverage and they declined it. At least you won't suffer an E & O claim!!

  • http://www.ryanhanley.com/about Ryan Hanley

    The previous comment is courtesy of Michael McPherson. Mick can be reached at mmcpherson@emerywebb.com. For more on Mick check out http://www.emerywebb.com.

  • http://www.ryanhanley.com/about Ryan Hanley

    At the end of your article you asked what other common misconceptions there are.
    A very good one is that Ordinance or Law coverage is nothing more than an expensive extra coverage. WRONG!! Much of the code enforcement in the state of New York's townships didn't begin until the late 1960's. As a result many homeowners could be caught with their pants down in the event of even a PARTIAL loss. Outer wall construction on most homes up to that point was two x four construction. Subsequent code changes now require two x SIX construction if you would of course like to have a CO for your reconstructed home. I have heard stories of folks who did not have this coverage and in a partial loss they came up $ 12,000 to $ 15,000 short during reconstruction.
    As well, most towns require complete & entire reconstruction for dwellings that have experienced a loss of 50% or greater…meaning you'll have to attempt to rebuild an entire home with maybe only half of your coverage due to the State regulations preventing the carrier from enriching the client. In a nutshell, if you have a 50% loss the carrier can only pay you based on that amount of loss. But the township may very well tell you that you MUST rebuild the entire dwelling. Ordinance or Law coverage is the only coverage that will save the client from these types of occurences.
    As many clients will request cheap coverage I will explain to them that it is what it sounds like…CHEAP!! Meaning at claim time they could potentially suffer at bare minimum unexpected extra expense. Value is constantly overlooked and/or ignored. There is no merit in selling a homeowners policy without this coverage. At bare minimum, should you have no choice but to sell the client the cheap stuff, have them sign off to say that you explained and offered them the correct coverage and they declined it. At least you won't suffer an E & O claim!!

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