Raccoon vandalism to flooding: 6 Homeowners insurance myths you need to know

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UPDATED: 2022-07-25T05:15:57.131Z
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Do you believe a homeowners insurance myth? Clearsurance uncovers 6 homeowners insurance myths and provides you with the facts. Getting the facts and not falling victim to common myths could save you thousands or even hundreds of thousands in property damage and the associated repair bills. So enter your zip code and compare homeowners insurance quotes today.

Myths covered in this blog:

Myth 1: If you have homeowners insurance, everything under your roof is covered.

Homeowners often believe that their home insurance policy will cover any damage that may happen to their home. In reality, there are a number of things that are excluded from homeowners insurance coverage. Every homeowners policy has exclusions written into the policies with the biggest one being neglect. No matter what causes the damage, insurance policies won't cover damage associated with something you could've reasonably prevented. What else is not a covered peril with homeowners insurance?

Fact: There are a number of items or situations that aren’t covered by a standard homeowners insurance policy.

First, standard wear and tear isn’t covered. For example, if your hot water heater stops working, your homeowners insurance policy doesn’t pay to replace it. If you are purchasing a home that is more than a few years old, you might want to consider asking for home warranty coverage, which can help in the event that one of these expensive items breaks down. However, don’t look to your homeowners insurance to handle the replacements.

Valuable items aren’t automatically covered under a basic homeowners policy either. Given that items such as jewelry and antique watches are frequently stolen, most homeowner policies place low liability limits on valuable items.

In order to adequately cover those items, you’ll need separate, additional coverage called a personal property rider. You can add this to your homeowners insurance policy to receive coverage for your valuables. The good news is that it often provides coverage for loss, such as losing an engagement ring at the beach.

Homeowners insurance companies often allow you to add extra coverage to your homeowners insurance policy if you need it, including Lemonade (Lemonade profile).

Finally, insurance policies typically have exclusions for severe incidences such as hurricanes. If you don't have a hurricane exclusion in a hurricane prone area, your rates could go up dramatically whereas a separate hurricane policy can be very reasonable.

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Be sure to check your homeowners insurance policy to get a better understanding of what it covers. Certain perils may be excluded from your coverage, such as earthquake or hurricane coverage.

Myth 2: Injuries that happen in your home are always covered by your homeowners insurance policy.

This myth arises from a misunderstanding of a provision that covers guests to your home. Coverage eligibility depends on who was injured in your home whether it was someone who lives there or someone who was visiting. Essentially, it boils down to liability.

Fact: Whether or not an injury in your home is covered by home insurance depends on who was injured.

If a guest to your home is injured, your homeowners liability insurance will typically cover the bills if you are sued. However, if a family member who lives in the home is injured, medical bills resulting from that event will be covered by health insurance, not your homeowners insurance policy.

An exception would occur if you had certain restricted dog breeds and the injury was from a dog bite. Ironically, injuries associated with wild animals would be covered by some companies before certain breeds of dogs.

Myth 3: Home-based business equipment is covered by a homeowners insurance policy.

The origins of this myth probably come from the fact that there are many different kinds of work-from-home scenarios. The way your laptop is treated by your insurance company will be different if you own it and use it just for personal use, or if you use it for your home-based business.

Fact: If you run a small business out of your home, you may need separate insurance for your business aside from your home insurance.

Running a small business present different risks that need to be covered by insurance coverage that isn’t included in your homeowners insurance policy. The type of coverage that you’ll need will vary depending on whether you are a remote employee working for a company using employer-provided equipment as opposed to working for yourself as a small business or sole proprietor.

The situation can get more complicated if you are using home equipment for business purposes, such as a baking business. If you don’t have a separate business policy and there’s a fire in your oven that causes damage to your kitchen, your ability to file a claim might hinge on whether you were cooking for your family at the time or baking for your business.

Unfortunately, many families face this challenge, and many insurance companies will default to not paying you if you don't have a separate policy for your business. The same rule applies to liability. If you have an incident that could be seen as business liability in your home, your personal liability may or may not cover it.

Your insurance agent can help to navigate these questions and determine what type of business policy will work best for your home-based business situation. Check out this detail from Esurance on why a home-based business needs protection.

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Myth 4: Homeowners insurance always covers flooding.

This is one of the more misunderstood facets of homeowners insurance. Whether or not your flood damage is covered by a standard homeowners insurance policy depends on how the water damage occurred.

Fact: Water damage from a faulty mechanical system may be covered as long as you have the right water backup and other coverage options, but flooding from severe weather likely isn’t. This is when flood insurance would kick in.

Homeowners insurance covers some types of water damage in your home, but not all types. Flooding in your home is typically covered if it’s the result of something accidental and unexpected.

If an appliance or machine in your home malfunctioned or broke and caused a flood, your standard homeowners insurance policy may cover it. However, your claim could be denied by your home insurance company if it’s determined that the reason your machine broke was because you failed to properly maintain it.

Flooding caused by a severe storm, such as a hurricane, is not typically covered by your standard home insurance policy. You likely need flood insurance to receive coverage for this type of flooding.

Many homeowners insurance companies offer flood insurance coverage. You can add this specific flood insurance coverage to your home insurance policy, including Progressive (Progressive profile). Flood insurance is also available from the National Flood Insurance Program.

If you need flood insurance, be sure to check out Clearsurance’s Flood Insurance Guide.

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Myth 5: You should base your homeowners insurance coverage on your home’s market value or purchase price.

This myth is a persistent one. It may originate from a misinterpretation of how homeowners insurance is meant to function. It can be challenging to separate what you paid for a home and what it would cost to rebuild it.

Fact: Your homeowners insurance policy should cover the cost to rebuild your home.

The focus for insurers is on the cost of rebuilding your home. As a result, that’s what they assess when determining what to cover. While it may seem logical to tie your coverage to what you paid for your house, that isn’t how actuaries determine what the right amount of coverage for your home will be.

Real estate prices rise and fall due to changes in the market, the availability of housing in the area, and a variety of other factors. Those factors determined the price that you paid for your house, not what an insurer would pay for a new house to be rebuilt if your property was a total loss from a covered event, such as a fire.

Depending on the housing market conditions in your area, the cost to rebuild your home could be higher or lower than the price you paid for it. You want to ensure that your homeowners insurance coverage is sufficient to rebuild your home and replace everything within it.

This is why it’s so important to have an accurate and up-to-date home inventory. In addition to the loss of the structure, your homeowners insurance policy should provide adequate coverage to replace your personal items that were lost in the covered event, such as your furniture, clothing, and kitchen items.

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Myth 6: Damage caused by pests is covered.

It’s never pleasant when pests invade your home and the damage they cause can be expensive. Many homeowners believe that their home insurance policy will cover the damage caused by a pest infestation. However, that’s a homeowners insurance myth.

Fact: With a few exceptions, much of the damage caused by pests will not be covered under a standard homeowners insurance policy.

Homeowners should inspect their home frequently for any pest infestations to stop them before they cause a large amount of damage. Homeowners insurance companies tend to consider inspecting your home for pests to be maintenance on a home that the homeowner should keep up with regularly. This is why pest damage is often not covered by a standard homeowners insurance policy.

Termites are very common in parts of the country and they can cause an incredible amount of damage to your home’s frame in very short order. If you live in a state that is considered a termite risk, have your home inspected regularly by a licensed inspector, so that you can manage any pests as soon as they appear.

However, if raccoons get into your home and trash the place, that damage might be covered by your homeowner’s policy. While the unlucky fellow in the news story wasn’t covered, some homeowners policy insurers would consider that damage vandalism, rather than a maintenance oversight.


Now that 6 key homeowners insurance myths have been busted, consider digging into leading personalized tools that can help you evaluate your own homeowners insurance company and whether there are better options out there for your individualized needs.

Image source: sommart sombutwanitkul/ shutterstock.com

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