When it comes to insurance, you pay a monthly cost (know as premium) in return for protection for your family and your assets. Insurance policies and language can be confusing, but don’t let these insurance myths leave you under-covered in case of an accident:
Myth #1) “My insurance will cover me if my car gets stolen, suffers hail damage, or gets burned in a fire.
Fact #1) Unless you have comprehensive coverage, which covers damages to your vehicle in the event of a fire, theft, weather or animal damage while it is parked, you are not actually covered for those instances.
In most states, the minimum requirements for auto insurance do not require that you have comprehensive coverage. In most cases, they only require liability converge, which covers damages you may cause others. To be fully protected from all types of damages and situations, you need to purchase comprehensive, collision, and hit-and-run coverage.
Myth #2) “My auto insurance will cover my belongings if items are stolen out of my vehicle.”
Fact #2) Some think personal items are covered under the comprehensive coverage we discussed above but that is not the case. Comprehensive coverage does not extend to items and personal belongings stolen from your vehicle. It does cover items that are attached to your vehicle (think radio or built-in GPS device) but nothing else. Not a gym bag, computer, groceries, etc.
To make sure your personal items in your car are covered in case of theft, you would need to have a Homeowners or Renters policy. If you do have a Homeowners or Renters policy and keep things in your vehicle that you’re worried about being stolen (laptops, tablets, expensive clothing), you should also make sure that the deductible on your Homeowners or Renters policy is low enough that filing a claim makes sense. Most companies that give such policies not only cover your belongings at home, but also give you a small percentage covered where you take them, including in your car.
Myth #3) “If my home is ever in a fire, my insurance company will reimburse me for whatever personal items that I tell them I owned at the time of the fire.”
Fact#3) In the event of a fire, or other covered loss such as theft etc., the claims adjuster will ask you to make a list of everything you owned and will also ask you to include specific details such as purchase price, date of purchase, and serial numbers depending on the items.
For higher value items such as paintings, jewelry, Rolex watches, etc. the adjuster will likely require proof you had that item which could be from a receipt or other documentation.
To avoid being declined payouts for items that you can’t recall, or have no proof of owning, make sure you have a home inventory that includes photos, receipts, and anything else that will help you prove ownership. Keep your inventory in a fireproof safe or at a friend’s house, or on the cloud or in your email so it’s still around when you need it.
We recommend standing in the corner of each room in your home and take pictures of the items there. At the very least, this will help jog their memory in case you have to recall your belongings after a loss and serves as great proof. A video works well too!
Myth #4) “My Homeowners insurance will cover flood or rain damage.”
Fact #4) A standard home insurance policy does not cover damage caused by a flood or other natural waters like overflow from rain or creeks. You need a separate flood insurance policy for that; the same goes for earthquakes. Always review your policy at renewal time each year with your agent to make sure you understand the exclusions. These exclusion are what is NOT covered and by your policy, such as flood or earthquake on a standard home owners policy.
Myth #5) “If my employer provides a life insurance policy there is no need for me to get an additional policy or more coverage”
Fact #5) Many businesses offer the ability to pay for a cheap life insurance policy through your paycheck deductions. While the thought of having a life insurance policy does sound nice, most work life insurance policies are cancelled when you leave that specific job. So you’re paying all of that time for a policy that you don’t get to take with you when you leave.
Also, most work life policies are accidental death AND dismemberment. This means that in order for your beneficiary to receive a payout at all you would have to pass away AND lose a finger, toe, etc. If you pass but are not dismembered in any sort of way, your family will not get the payout. This is a huge reason these work life policies are so cheap. Not only are you getting a group discount, but you are also getting coverage for something that has less than a 1% change of happening! Most people die from car accidents, illness, or old age.
So, a work life policy should not be counted on as the main coverage for the simple fact that it is so unlikely it will ever pay out. It should be considered, frosting. An extra cherry on top of another good life policy that will actually payout regardless of what happens to you. This is important since the whole point of these policies is for your family to have that income when you are gone. Not a 1% chance of an income, but guaranteed funds so they can keep the house, or still pay bills, and afford a proper funeral.
Always: If you’re concerned or curious, don’t ever assume something is covered. Call your agent to make sure! Not all policies are the same and not all companies will pay attention to your individual needs.
