It’s hard to know if a piece of information we hear is factual or not. When it comes to insurance, many people have fallen under the trap of believing a widely held but false idea, leaving them ill-prepared when something happens and they aren’t protected like they thought they would be. What are some of these myths? Here are six scary insurance myths you need to know:
Myth 1: Your home insurance policy automatically includes flood and earthquake insurance. Flood and earthquake coverage are not included with your standard insurance policy. For floods especially, a separate policy needs to be purchased. In most cases, homes in flood-prone areas are often required to have separate flood insurance because these types of natural disasters are generally too devastating/damaging to be covered by your homeowners policy.
Myth 2: Your homeowners or car insurance policy will cover your small business. Business liability and business equipment is not covered by homeowners insurance. If you are running (or considering running a home-based business), you must purchase a separate insurance policy for your business. Discuss this with your agent to ensure proper coverage.
Myth 3: You may be responsible if someone other than yourself, a friend or family member, wrecks your car. When you let someone borrow or drive your car, you are also letting them borrow your insurance. If your car is involved in an accident, you may be responsible, even if someone else was driving. This means your insurance would cover the damage and it would go on your record. Before lending your car to anyone, check three things: check your policy or contact your agent to understand conditions and terms, make sure your friend or whoever drives your car has a valid driver’s license, and always make sure that your registration and insurance information are in your glove box.
Myth 4: You only need life insurance if you have children. Everyone needs life insurance. It helps cover the costs of funerals, bills, etc after death. It can also be used to leave money to a relative or your favorite charity. As you grow older, the cost of life insurance increases significantly and if you have a certain health issue(s), it will be difficult to be able to qualify for life insurance later in life. Make sure you have life insurance coverage, whether you have children or not.
Myth 5: Your insurance will cover you if your car is stolen, vandalized or damaged by falling tree limbs, hail, fire or flood. Standard liability protection will not cover these types of damage. You would need to purchase comprehensive and collision coverage, which are optional and will increase your premium, but having both coverages will help in fully protecting your vehicle from all types of damages.
Myth 6: You only need the minimum amount of auto liability insurance required by law. State laws require a minimum liability amount to be a legal driver; however, this will likely not be enough coverage in the event of an accident. In Ohio, the required minimum for Bodily Injury Liability Coverage is currently $25,000 per person injured in any one accident and $50,000 for all persons injured in any one accident. This can vary from state to state as well. In comparison to Ohio, the required minimum for Bodily Injury Liability Coverage in California is currently $15,000 per person and $30,000 per accident. Accidents will often cost more than the minimum limits, so you will have to spend more money out-of-pocket for whatever has been lost or damaged.
Understanding these myths will help you become aware of some of the changes you may need to make in your insurance policies. Contact your agent at (937) 848-6181 to make sure you are covered and getting the most out of your coverage.