Insurance is about managing risk. Insurance companies use sophisticated algorithms to determine how
risky each of us is, and they price policies accordingly. That's why smokers pay
more for health insurance and bad drivers pay more for car insurance.
Still, insurance can be confusing and aggressive sales agents only make the problem worse. To help clear things up, we're debunking some of the most pervasive myths about different types of insurance.
Homeowner's Insurance
Myth: If something happens to your home, you'll be given the money to replace your items.
Many people mistakenly believe their homeowner's insurance will pay for them to replace an item if it's damaged or stolen, but that's not usually how it works. If you lose an old computer most policies won't foot the bill for a brand new one. All they'll give you is the amount of cash your old one was worth when you lost it. Policies do exist that cover full replacement of items, but you'll pay a higher monthly premium for those.
FACT: According to the National Association of Insurance Commissioners (NAIC), homeowners insurance covers the structure and contents of your house in case of damage. It is also required by lenders as long as you have a mortgage.
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