Homeowners insurance is something most people don’t think much about—until they really need it.

But when disaster strikes—a tree falls on your roof, a pipe bursts and floods your basement, or worse—your policy becomes your lifeline. Unfortunately, many homeowners operate under assumptions that can leave them underprepared and underinsured.

Let’s clear the air by breaking down some of the most common myths about homeowners insurance, so you can make confident, informed decisions about protecting your home.

Myth #1: Homeowners Insurance Covers Everything

Reality: Standard policies do not cover everything.

Notable gaps in coverage:

• Flood damage – Typically requires a separate policy through the NFIP or private insurer.
  

• Earthquakes – Not included in standard coverage; available as an add-on.
  

• Maintenance issues – Wear and tear from neglect isn’t covered.
  

• Sewer backups – Often excluded, but you can add a rider for this.

Always read your policy carefully and talk to your insurance agent about what’s actually covered.

Myth #2: My Home Is Insured for Its Market Value

Reality: Insurance is based on replacement cost, not market value.

Market value includes the land and location. But if your home were damaged or destroyed, the real concern is: How much would it cost to rebuild it from scratch? That’s what your insurance should reflect—construction materials, labor, and rebuilding costs—not the selling price.

Myth #3: If Someone Gets Hurt on My Property, It’s Always Covered

Reality: There are limits to liability coverage.

Yes, your policy likely includes personal liability protection. But if someone is injured due to your negligence (like ignoring a broken step), or if the injury is business-related, you could face expenses beyond your coverage limits—or have your claim denied entirely.

Myth #4: My Policy Fully Covers My Valuables

Reality: Most policies cap coverage for high-value items.

Jewelry, art, collectibles, high-end electronics, and similar valuables often have sub-limits. If stolen, lost, or damaged, your policy may only reimburse a fraction of the item’s actual worth.

Tip: Ask your insurer about a scheduled personal property endorsement to ensure full protection of your prized possessions.

Myth #5: I Don’t Need Extra Insurance Because I Work from Home

Reality: Your policy may not fully cover work-related property or activities.

With more people working remotely, many assume their policy covers everything work-related—but it often doesn’t.

Coverage Gaps to Watch:

• Low reimbursement caps for business equipment

• No coverage for employer-owned property

• No liability protection for clients or deliveries

• No coverage for business inventory

Solution: Consider a home-based business policy or add endorsements for business property and liability.

Myth #6: Mold and Termite Damage Are Covered

Reality: Most policies exclude damage from mold and pests.

Mold from a covered event (like a burst pipe) might be included, but long-term issues caused by neglect usually aren’t. Termite damage? Almost never covered—it’s considered preventable maintenance.

Myth #7: If My Neighbor’s Tree Falls on My House, They Pay

Reality: Your insurance typically handles the damage to your property.

Unless your neighbor was negligent (like ignoring a visibly dead tree), their insurance won’t cover the damage. It's a good reminder to maintain your own trees—and understand your own policy.

Myth #8: Filing a Claim Always Increases My Premium

Reality: Not always—but it can.

Insurance companies evaluate your claim type, size, history, and location before adjusting your rate. One small claim might not do much, but repeated claims or major payouts can affect your premiums. It’s wise to compare the cost of repairs against your deductible before filing.

Final Thoughts

Homeowners insurance is essential—but it’s not one-size-fits-all. Understanding your policy, knowing your exclusions, and reviewing coverage limits can save you serious stress and money down the line.

Confused about homeowners insurance?

Whether you're buying, selling, or simply safeguarding your investment, I'm here to guide you. Let's discuss your real estate goals and how the right coverage can fit in.

Visit damonhometeam.com to get started!