10 Common Home Insurance Myths Debunked

With all of the steps you take and the decisions you make in buying a home, you might not give homeowners insurance the attention it deserves. In fact, you might think you already know all you need to know on the subject. 

But there’s many things people may not know about homeowners insurance, including whether certain beliefs are homeowners insurance facts or myths. For instance, what exactly does homeowners insurance cover? Are premium rates fixed? To shed light on these uncertainties, here are ten common myths about home insurance and the truths behind them. 

Myth 1: Homeowners Insurance Is Too Expensive and Not Worth the Cost 

Your home lender certainly doesn’t think that’s true. You’ll almost certainly have to prove you’ve obtained coverage before you get your loan. That’s because your lender can imagine your home burning to ash and then finding there’s no homeowners policy, and their customers can’t afford to continue making mortgage payments on a home that no longer exists. And there’s only an empty lot to foreclose on. 

That would be their worst nightmare. 

The median sale price of an American home today is just over $428,000. Could you pay the cost of renovating out of pocket after a serious house fire? Most Americans couldn’t. That’s why you have homeowners insurance in the first place. 

You’ll benefit in many other ways, too, from liability protection against lawsuits to paying the medical bills of visitors injured on your property to temporary housing while your home is being rehabbed after a fire or other devastating event. In addition, most policies will also cover your possessions in a self-storage facility or even in your car. Ask your agent to explain in detail the many ways your policy is worth more than the price. 

Myth 2: All Your Personal Belongings Are Fully Covered 

It’s the word “fully” that makes the above statement a myth. Yes, your personal possessions are covered in the case of theft, vandalism, fire, and other damaging events. But your standard homeowners policy contains monetary limits on your personal items coverage — usually $1,000 or $1,500. 

For most of your possessions, that’s adequate. But not if you own valuable art, antiques, jewelry, or other goods. Take inventory of your possessions and list everything of higher value. Then, consult your agent about getting a rider or additional coverage specifically on those items. The cost isn’t high, especially against the peace of mind you’ll gain knowing that you are now fully covered financially. 

Myth 3: Homeowners Insurance Covers All Types of Damage 

All water heaters eventually break down. It’s inevitable. And not covered by your insurer. The purpose of homeowners coverage — like all forms of insurance — is to financially protect against the unexpected or unpredictable. 

You can’t predict a tornado will rip the roof off your home, so you can certainly file a claim under that circumstance. On the other hand, if you have a 30-year-old roof that you’ve never patched or repaired, it will eventually leak in a rainstorm. If it does, you can’t file a claim for expensive office equipment ruined in the deluge. 

As homeowners, it’s always your responsibility to stay on top of upkeep and maintenance. Call your agent for unexpected damage (or a fuller understanding of what homeowners insurance actually is and what it does and doesn’t cover). 

Myth 4: Home Insurance Premiums Are Fixed and Non-Negotiable 

The truth is you have plenty of say-so in controlling the cost of your coverage. First, let your insurance agent offer you a quote. That’s your starting point. 

You can get a better rate if, for instance, you raise your deductible. Your deductible is the dollar amount you agree to pay out of pocket for a covered claim before your insurer pays the rest. If your insurance quote comes with a $1,000 deductible, ask what your rate will be if you double your deductible. Your rate will go down because you’re assuming more of the cost of a claim, which means your insurer will pay less. 

There’s a possible downside, of course. If it costs $20,000 to replace that tornado-destroyed roof, you’ll have to pay twice as much out of pocket with the higher deductible than you would with the lower quoted amount. Can you afford to pay $2,000 for damage recovery? If not, you might be better off paying more per month for your premiums but less upfront in emergencies. 

Another method of lowering that quote is by adjusting the coverage limits. You can also often earn a lower rate by “bundling” your coverage. That involves using the same insurer that covers your vehicles, life insurance, or other policies, and taking advantage of the discounts triggered by the additional business. 

Myth 5: Filing a Claim Will Always Increase Your Premiums 

Untrue. Homeowners insurance would never be the necessity it is if claims never needed to be filed. Your insurer knows that bad things happen and won’t be shocked or offended when you check in with a claim. 

It’s only those making multiple or sketchy claims that concern insurers. In some circumstances, they might raise rates against those offenders, hoping they’ll go elsewhere. 

Just remember your deductible. If it’s set at $1,000 and you receive damages that will cost $1,200 to repair, is it worth filing a claim? You’ll only be reimbursed $200, and you might want to keep the slate clean in the event that you must make a more costly claim at some point down the road. 

Myth 6: Only Homeowners Need Homeowners Insurance Coverage 

If a tree limb of yours snaps off in a windstorm and falls on a passing pedestrian, that victim will be thankful that you have home coverage. 

Your coverage doesn’t just cover damage to your home. It will also pay for the medical care of those hurt in your home or as a result of your property. Dog bite injuries are covered, too. 

And finally, your policy has liability protection to pay for your legal bills and the financial damages of those who successfully bring lawsuits. In short, your coverage can be beneficial to many people who might not even own a home. 

Myth 7: Flood Damage Is Covered by Standard Policies 

This homeowners myth could cost you a world of loss if you believe it and don’t get flood insurance when you need it. Floods can cause such devastating structural damage that standard policies rarely, if ever, cover the weather event. (This doesn’t refer to internal flooding, such as that caused by a broker water pipe. That type of damage is usually covered.) If you’re moving into a high-risk flood plain, you’ll be required to have separate flood insurance if you buy your home with federal mortgage support. 

Myth 8: Location Has No Impact on Home Insurance Rates 

It certainly does. Remember those floodplains? Similarly, if you buy a home in a heavily forested area of California, your insurer might set rates based on the risk of wildfire damage. Similarly, hurricane risk can elevate your rate if you buy on the Gulf Coast. 

It’s not all about weather risks. If you live in a city, neighborhood, or even street with a lot of break-ins or acts of vandalism to nearby homes, you’ll likely pay more. Once again, your insurance agent will be able to explain any rate-increasing risks related to your address. 

Myth 9: Older Homes Are Cheaper to Insure Because They’re Less Valuable 

Count on it costing more to insure a multi-million-dollar century mansion on your city’s most upscale street than the newly constructed cookie-cutter $300,000 townhouse. 

Remember, it’s all about your insurer’s perception of the likelihood you’ll file a claim and what that will cost the insurer. An older home with a slate roof or marble entry hall will be hard — and costly — to replace, so you might pay more to insure your century home than if you have new construction. It depends on a lot of factors that your insurance agent can explain when you ask about coverage costs, regardless of the age of your home. 

Myth 10: Insurance Will Cover the Market Value of Your Home 

This homeowners insurance myth is true…sort of. If your home burns to the ground, your insurer will cover the losses based in part on the value of similar homes in your same neighborhood or street. 

Fair enough. But what if you just recently completed a $50,000 kitchen remodeling or added on a state-of-the-art home office? Will you be reimbursed for that? 

Only if your insurer knew about the extensive remodeling or addition and was already including it in the premiums you pay. The lesson here is to consult your agent whenever you spend significantly on upgrading your home. If you experience a major loss, you’ll be glad you did. 

Make Sure Your Home Is Covered 

Enough common home insurance myths. Consult with your independent Acceptance Insurance agent when you need clarity and coverage. You’ll always get the lowdown on buzzwords, rates, benefits, and how to read your homeowners policy documents. 

Call us at (877) 405-7102 or get a fast quote online. You can also find an office near you.