Many homeowners think they’re fully protected—until disaster strikes. Unfortunately, insurance myths and simple mistakes can leave you exposed. Here’s how to separate fact from fiction and avoid costly errors.

Myth 1: “My Policy Covers Everything”
Reality: Most policies exclude key risks like:

Floods

Earthquakes

Neglect or poor maintenance

Tip: Consider endorsements or separate policies for excluded perils. For instance, flood insurance is federally backed and must be purchased through the NFIP or a private insurer.

Myth 2: “I Only Need Enough Coverage to Match My Home’s Market Value”
Reality: Market value includes land, which doesn’t need insurance. Focus on the rebuild cost, which is often higher than the market value, especially during inflation or labor shortages.

Mistake 1: Not Creating a Home Inventory
After a disaster, estimating the value of lost items is nearly impossible from memory. Create a home inventory with:

Photos or videos of each room

Receipts, if possible

Cloud-based storage for access during emergencies

Mistake 2: Choosing the Lowest Premium Without Reading the Policy
Cheap premiums often mean stripped-down coverage. Make sure you’re comparing apples to apples. Look at deductibles, exclusions, and customer service ratings.

Myth 3: “I Don’t Need Liability Coverage If I’m Careful”
Reality: You can be held liable for injuries on your property—even if you’re not at fault. Liability claims can include:

Dog bites

Slips and falls

Accidents involving contractors

Mistake 3: Failing to Disclose Home-Based Business Activities
Running a business from home? Most homeowners policies won’t cover business equipment or liability. You may need a rider or a separate business insurance policy.

Myth 4: “Flood Insurance Is Only for High-Risk Areas”
Reality: More than 20% of flood claims come from low- to moderate-risk areas. It only takes a few inches of water to cause thousands in damage.