As a homeowner, your property is likely one of your most significant investments. Safeguarding it with adequate insurance is crucial; however, the world of homeowners insurance is riddled with myths that can lead to inadequate protection or unexpected out-of-pocket expenses. At Looker Wolfe & Gephart, we believe in empowering our clients with accurate information to enable them to make informed decisions. In this article, we’ll debunk 10 of the most prevalent homeowners insurance myths, drawing from industry expertise and common client questions. Whether you’re a first-time buyer or a seasoned homeowner, understanding these truths can help you avoid costly mistakes.
Myth 1: “Flood damage is covered under my standard homeowners policy.”
Truth: Standard homeowners policies do not cover flood damage from natural disasters, such as heavy rains, hurricanes, or river overflows. To protect against floods, you’ll need a separate flood insurance policy, typically available through the National Flood Insurance Program (NFIP) or private insurers. If you live in a flood-prone area, this additional coverage is non-negotiable and usually required if you have a mortgage. Even if you aren’t in a higher risk area, flood coverage is still almost always available!
Myth 2: “Home insurance covers all types of water damage.”
Truth: Coverage is limited to sudden and accidental water events, like a burst pipe or appliance malfunction. Gradual issues, such as slow leaks, ongoing seepage, or damage from poor maintenance, are generally excluded. Regular home inspections can help prevent these uncovered problems.
Myth 3: “My policy covers the market value of my home.”
Truth: Homeowners insurance focuses on the replacement cost—the expense to rebuild your home from the ground up—not its current market value. Market value includes factors like location and land, which aren’t part of rebuilding costs. Always review your policy to ensure it’s aligned with current construction prices.
Myth 4: “Jewelry, art, and collectibles are fully covered.”
Truth: While basic coverage exists for personal property, high-value items like jewelry, fine art, or collectibles often come with sub-limits (e.g., $1,500–$2,500 per category). For full protection, consider adding a scheduled endorsement or a separate floater policy that appraises and covers these valuables at their true worth, for broader coverage, and often times no deductible.
Myth 5: “Home insurance covers normal wear and tear.”
Truth: Insurance is meant for unforeseen, sudden events—not the natural aging of your home or issues from neglect and routine maintenance. Things like a worn-out roof or outdated plumbing won’t be covered unless damaged by a covered peril, like a storm.
Myth 6: “All personal belongings are covered, no matter where they are.”
Truth: Off-premises coverage for personal items (e.g., stolen from your car or while traveling) is usually limited to 10% of your total personal property limit. Additionally, categories like electronics or firearms may have their own sub-limits. If you travel frequently, discuss increasing these limits with your agent. In addition, coverage for personal property stored in a storage facility is usually limited to 10% as well.
Myth 7: “Liability coverage is only for incidents inside my home.”
Truth: Personal liability coverage in a standard policy often extends beyond your property lines. It can protect you in scenarios like your dog biting someone at a park or accidentally causing damage to someone else’s property while away from home. This “portable” protection is a key benefit of comprehensive policies and helps protect your assets.
Myth 8: “I should insure my home for the amount I paid for it.”
Truth: Your purchase price doesn’t reflect current rebuilding costs, which fluctuate with material prices, labor, and local building codes. Insure for the replacement cost value (RCV) instead. Tools like cost estimators can help determine the right amount—underinsuring could leave you paying the difference in a total loss. Most traditional mortgages require that you insure your home to the estimated cost of being rebuilt, as well as the insurance company’s underwriting rules. Ideally, if you have a catastrophic loss, you want to pay your deductible and transfer the rest of the financial cost to the insurance company.
Myth 9: “Home-based businesses are covered.”
Truth: If you run a business from home, standard homeowners policies offer minimal coverage for business-related equipment or liability (often just $2,500 or less). Professional tools, inventory, or client injuries may require a separate business owners policy (BOP) or endorsement to avoid gaps. More importantly, there is no liability coverage for accidental injury or property damage to others arising from home-based businesses.
Myth 10: “Making a claim will always raise my rates.”
Truth: Not every claim results in a premium hike. Factors like your claims history, the type and severity of the claim, and your insurer’s policies play a role. Small claims might not impact rates, but frequent or large ones could. In PA (as of 2025), an insurance company cannot surcharge or increase your premium for just 1 homeowners claim. 2 or more in a 3 year period will result in a surcharge, however.
The Bottom Line: Homeowners insurance is designed to shield your most valuable asset, but misconceptions can undermine that protection. By debunking these myths, you can better tailor your policy to your lifestyle and risks, ensuring peace of mind. If you’re questioning your current coverage or seeking a complimentary policy review, the team at LWG is here to assist. We’ll identify potential gaps and customize a plan that aligns with your needs and budget, without any obligation! Give us a call today at 717-657-9944 or email us at agents@lwginsurance to get started.