Are you certain that you know everything there is to know about your homeowners insurance policy? If not, it isn't your fault. All insurance policies tend to be a little complicated; you have to really dig through them, and you may not be able to understand all of the jargon. Because homeowners insurance policies can be so impenetrable, there are some misunderstandings involved in the process and the coverage. Below are the truths behind four of these misunderstandings.

1. You Can Self-Report Your Home Inventory

This can really be blamed on television. Often, you'll see someone on television losing everything they own and simply reporting a list of items to their insurance company. The insurance company then promptly reimburses them. It doesn't work quite like that. You need to produce a record of the items that you had in your house, preferably with serial numbers, receipts and photos. That is why it's so important to inventory your home before something occurs.

2. Flood Coverage Is Included

Some of this is due to a misunderstanding about what a flood is. When your toilet overflows, it's easy to say "The bathroom is flooded!" But to an insurance company, that's a plumbing issue -- not a flood. A flood occurs due to rainwater, overflowing rivers and other natural circumstances. Flood coverage is purchased separately and it is required for those who live within a flood zone.

3. All Your Items Are Covered to a Certain Amount

Individual items usually have a cap on them. For instance, say you have a $20,000 insurance policy and a $2,000 engagement ring. You may not be able to get the replacement value of that engagement ring because your individual item cap could be set at $1,200. This is true even though your actual policy is $20,000. Expensive items need to be insured separately or under a rider.

4. Mold and Other Maintenance Issues Are Covered

Mold and issues that are generally caused by neglect are usually not covered by an insurance policy. For instance, if you fail to cut down a dead tree and it falls on your home, it will probably not be covered because it shows a neglect of basic home maintenance. 

What's the best way to make sure that you're insurance savvy? Contact your insurance agent and ask them to go over your policies with you. An independent insurance agent can help you arrange your insurance policies to suit your budget and can explain to you exactly how they work and what they cover.