7 Common Insurance Myths

As you might have come to realize, there are times when it seems almost impossible to separate insurance fiction from insurance facts. Things you may have believed to be true were all part of the insurance fiction as you are about to see.

Here are some false myths you may have grown up thinking were true about insurance.

1. You will have to pay more for your insurance if you own a red car
Well, this may have been one of the most absurd myths of them all. You need to know that the color of your car has absolutely nothing to do with your car insurance coverage. Things like vehicle model, make, and even the safety features are what will determine your insurance premium. Factors like your zip code, discounts, and also credit history help determine your car insurance premium as well.

2. Insurance always covers rental cars if they get damaged
Insurance plans usually don’t reimburse coverage of rental cars after an accident. For this reason, these insurance plans are usually purchased separately. You must not believe the misconception that your insurance premiums can automatically cover the costs incurred by your replacement rental car.

3. You’re off the hook for any car payments if your car get totaled
Car values depreciate with time. Your car may even be worthless at the time of the accident. However, there is coverage that deals with such situations; the loan/lease gap coverage. The loan/lease gap coverage helps by paying off the remaining loan of your car if you get involved in an accident and if your car gets totaled.

4. Your landlord’s insurance premiums also covers your stuff
The landlord’s insurance policy typically covers the place you are living in, but that does not mean it also covers for your belongings in the building. For that reason, you need to have a renter’s insurance plan to cover for your personal belongings.

5. Insurance needs to only cover your home’s market value
You might have already realized that the cost of rebuilding your home from scratch usually costs way more than the home’s market value. So, whenever you are thinking of homeowner’s insurance coverage, you first need to ponder today’s labor and construction costs.

6. Homeowner’s policy also covers floods
You need to know that homeowner’s insurance and flood insurance are two separate insurance policies. You will need to have a flood insurance plan when you have a mortgage and are located in a flood zone.

7. You get a brand new item if your old one gets destroyed
In this case, you need to be aware of the difference between replacement cost value and actual cost value. You may have covered your television set some time back, let’s say it has been ten years now and the television set is destroyed in the flood. It is only natural that you will want your coverage to replace your TV set.

Do you have a question about insurance myths? Click here to contact Davco Insurance today!

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