With companies offering various flavours of insurance at a wide range of prices, there can certainly be much confusion over the exact manner in which house insurance actually works. Here are five top myths related to regular home insurance:

Myth Number 1 – filing for insurance makes premiums go up

This is a borderline case. While it is a fact that insurance companies do look at customers’ claim histories before deciding on their premiums, this does not automatically mean that making any claims will result in higher insurance costs in the future. What is more important is the frequency with which you make claims. So, when something valuable gets stolen or is damaged, don’t worry too much about future premiums. After all, insurance is a dead loss if you never use it when you need to.

Myth 2 – My insurance covers me for maintenance issues
Again, this depends heavily on circumstances. If you have issues that stem from a simple lack of basic fixes to everyday problems, then it is unlikely you will receive a payout from your insurance company. Examples include mold caused by an obvious leak that could have easily been fixed at little cost. 

Myth 3 – I need to cover the full market value of my house

This is false and illogical. Market house values are inflated compared to the actual cost of building a house from scratch, for the obvious reason that developers need to profit. What you need to think about is the price for a rebuild of your house should it ever be destroyed.

Myth 4 – I’m covered for accidental damage to personal belongings

Unfortunately this is not the case. For full coverage against damage to your belongings you generally need to pay extra for accidental damage coverage. For some people this can definitely be worth the money if they own many vital and potentially delicate items. For others, the extra 20% or so on top of their standard home insurance quote may prove to be uneconomical. Note that some generous companies may decide to pay out but this is entirely a discretionary matter and shouldn’t be relied upon.

Myth 5 – Payouts cover replacement costs

When you get a payout, you may expect it to be enough to buy a full replacement for whatever item has been lost, broken or stolen. But typically an insurance company will pay the estimated value of the item at the time it was lost or stolen, which may be significantly less than the cost of the item when it was new. If you want to ensure you can buy new replacements for items, get replacement cost coverage.