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Insurance Fact or Fiction?

Are you confident you have the right insurance to protect you from life’s little—and big—emergencies? You might be surprised. Take this quiz and find out where you stand.

1. A flash flood swept through my living room, ruining my carpet and damaging an antique wooden trunk filled with family photographs. My homeowners insurance will pay for all the damages.

FICTION: Your homeowners policy does not include flood coverage. In general, only policies issued through the National Flood Insurance Program provide homeowners coverage for damages from flooding. Check with your insurance provider to see how you can get coverage.

2. My eighteen-year-old son wrecked his 1996 Chevrolet Cavalier. Fortunately, his auto liability insurance will pay for his car repairs.

FICTION: Generally, auto liability policies provide coverage only to third-party vehicles—those operated by other drivers—in an accident. Your son would need collision insurance to pay for the damages to his car, which can be added to your auto insurance policy for minimal cost.

3. My 1920s home has old plumbing fixtures that have corroded. My homeowners policy will pay to replace them.

FICTION: Homeowners policies cover most major perils (cause of loss), but don’t include damages that consist of normal wear and tear, deterioration, or mechanical breakdowns of home systems and major appliances. You can purchase a home warranty plan for those types of problems through a number of vendors, such as American Home Shield.

4. I live in South Florida where a hurricane hit my beach house. I realize that because hurricane coverage is provided by a separate policy through the state wind pool, most hurricane-related damage isn’t covered by my homeowners policy. But my homeowners insurance will pay for food spoilage.

FACT: In areas with state-sponsored wind pool programs, your homeowners policy may exclude coverage for windstorm and hail damage. In most cases, your homeowners policy will pay for perishable items that spoil due to power loss or mechanical failure.

5. My homeowners policy will cover me if I accidentally spill bleach on my antique Oriental rug.

FICTION: Personal property under the homeowners policy is only covered for certain types of losses specifically listed in the policy. Broader coverage can be provided by a “Valuable Personal Property” policy, also known as a “personal articles floater,” which provides coverage for almost all types of loss at a minimal monthly cost.

Save on your insurance premium by taking advantage of credits and discounts:

Ask about a new home discount. Homes less than ten years old may qualify.

Consider different deductibles. A higher deductible will lower your premium.

Put in a burglar or fire alarm system. Most insurers offer a significant premium discount for a home monitoring system.

Keep your home in top condition. Regular home maintenance can help avoid unnecessary claims and will keep premiums down.

Originally published on USAA