Clearing Up Myths About Homeowners Insurance

Homeowners insurance isn't something people usually think about until they really need it. Unfortunately, by that time—a tree toppling onto the roof, a burst pipe in the basement, or something worse—it’s too late to address any mistaken assumptions about your policy. There are plenty of myths going around about homeowners insurance, so let’s clear some of them up to help you make informed decisions.

Myth #1: Homeowners Insurance Covers Everything

One common misconception is that homeowners insurance covers every type of damage or disaster. While many policies provide wide-ranging protection, they come with exclusions. In Gwinnett County, here are a few things standard policies typically don’t cover:

• Flood damage: Homeowners usually need to get a separate flood insurance policy through the National Flood Insurance Program (NFIP) or private insurers.
• Earthquake damage: Coverage is often available as an add-on or separate policy.
• General wear and tear or maintenance issues: Insurance is designed for sudden damage, not for deterioration over time due to neglect or aging.
• Sewer backups: Standard policies generally do not cover sewer or drain backups, but many insurers offer additional coverage.

It’s important to read your policy and understand what’s covered—and what’s not—before assuming you’re protected.

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

Many homeowners assume their insurance should match what their home would sell for on the market. In reality, insurance is based on the cost to rebuild, not your home’s resale value. Market value includes factors like land and location, while replacement cost focuses on materials and labor. With construction costs fluctuating, it’s essential to review your policy periodically to ensure you have enough coverage.

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

Liability coverage in a homeowners insurance policy does protect you if someone gets injured on your property, but there are exceptions. If the injury resulted from negligence—like ignoring a rotten deck railing that finally gave way—you could still be sued for damages beyond your policy limits. Also, if you run a business from home and a client gets injured, your standard policy might not cover it.

Myth #4: My Policy Covers My Valuables Fully

Most homeowners policies have coverage limits for expensive items including jewelry, artwork, collectibles, high-end electronics, and firearms. While your policy may provide some protection, it often comes with per-item or category caps that may be far lower than the actual value of your belongings. This means that if a valuable item is lost, stolen, or damaged, your standard policy might only reimburse a fraction of its worth.

If you own high-value items that exceed these limits, you can add a scheduled personal property endorsement to specifically insure them for their full appraised value. This provides broader protection, including coverage for accidental loss or damage that standard policies often exclude. To ensure adequate protection, it’s wise to periodically review your policy, get professional appraisals for valuable items, and keep an updated inventory of your possessions.

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

With more people working remotely, many homeowners assume their standard insurance fully covers work-related equipment and activities. This is a common misunderstanding. While a standard homeowners policy may offer limited coverage for business property, it often has restrictions on the value of work equipment it will reimburse and may not cover items owned by your employer.

Key Coverage Gaps:

• Limited coverage for work equipment: Your policy may only reimburse up to a certain amount and might not cover employer-owned equipment at all.
• No business liability protection: If a client, customer, or delivery person is injured on your property, you could be personally responsible.
• Business inventory may not be covered: If you store products or materials at home, your standard policy likely won’t protect against theft, fire, or other damage.

To make sure you’re fully covered in this scenario, consider the following options:

• Home-based business policy: Offers broader protection for business property and liability.
• Business property endorsement: Increases coverage limits for work-related equipment.
• Commercial liability coverage: Protects against lawsuits if someone is injured while visiting for business purposes.

If you work from home, check with your insurer to ensure you have the right coverage before an unexpected loss occurs.

Myth #6: Homeowners Insurance Covers Mold and Termite Damage

Mold and pest damage are generally considered preventable maintenance issues, not sudden and accidental damage. That’s why most policies don’t cover them. If mold results from a covered peril—such as water damage from a burst pipe—your policy may help pay for remediation. But if the mold is due to long-term humidity or leaks that weren’t addressed, you’re likely responsible for the cost.

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

This one surprises a lot of people. In most cases, your insurance covers damage to your property, regardless of where the tree came from. However, if your neighbor was negligent—like if they knew the tree was dead and did nothing about it—you might be able to file a claim with their insurance or take legal action.

Myth #8: Filing a Claim Always Leads to Higher Premiums

This isn’t necessarily true. Insurance companies consider many factors when adjusting rates, including your claims history, the type of claim, and your location. One small claim may not impact your premium much, but frequent claims or a history of high payouts could raise your rates. That’s why it’s important to weigh the cost of repairs against your deductible before filing.

Final Thoughts

Homeowners insurance is an essential safeguard, but it’s not a one-size-fits-all policy. Understanding what’s covered—and what isn’t—can help you avoid costly surprises down the road. If you’re unsure about your coverage, take the time to review your policy with your insurance agent to ensure you have the right protection in place.

Have questions about homeowners insurance in Gwinnett County and how it affects your real estate decisions? Let’s chat.