Hey Lykkers! Homeowners insurance is one of those things most of us think we understand—until something actually happens. And let’s be honest: that’s when the confusion hits. Many homeowners believe common myths about insurance, and those misunderstandings can lead to costly surprises.

Let’s break down the biggest myths, explain the truth, and help you keep both your home and your finances protected.

Myth 1: “My Insurance Covers Everything”

It’s easy to assume your policy will cover everything that could happen to your home. Fire? Theft? Often yes. But “everything” is where trouble starts. Most standard homeowners policies cover certain sudden and accidental events—like a burst pipe or a house fire—but they typically do not cover gradual damage or preventable problems.

What to do: Review your declarations page (coverage summary) and ask your agent what your policy excludes—especially for water damage, wear and tear, and maintenance-related issues.

Myth 2: “Floods and Earthquakes are Covered”

Many homeowners assume that having insurance means they’re protected against all natural disasters. That’s usually not the case. Flooding and earthquakes are commonly excluded from standard homeowners policies, and they often require separate coverage.

Even if you don’t live near the coast, flooding can still occur from heavy rain, drainage problems, or overflowing water in the area. If your risk is meaningful, confirm your options before a storm season arrives.

Homeowners insurance usually includes personal property coverage, but it’s not unlimited. High-value items—like jewelry, collectibles, or fine art—often have special sub-limits unless you add an endorsement (sometimes called a “scheduled items” add-on).

What to do: Make a quick home inventory, note big-ticket items, and ask whether your valuables exceed standard limits.

Myth 4: “Older Homes are Cheaper to Insure”

It’s tempting to think an older home costs less to insure because it might be worth less on the market. But insurance is typically based on replacement cost—what it would cost to rebuild—rather than the price you could sell it for.

Older homes may have outdated wiring, plumbing, or roofing, which can increase repair complexity and claim risk. That can translate into higher premiums, not lower.

Myth 5: “Filing Any Claim Won’t Affect My Premium”

Not all claims are equal. A single claim may not change much, but repeated claims—or large losses—can raise premiums or even lead to non-renewal. That’s why many professionals recommend paying out-of-pocket for minor damage and saving claims for major losses where the financial impact is truly significant.

Expert Insight

Bonnie Lee, a property claims executive, said that many homeowners are often caught off guard by how limited their coverage can be: standard policies usually apply to sudden, accidental incidents, not ongoing maintenance problems, pest damage, or losses tied to operating a business from home. She added that reviewing the policy details and coverage limits helps ensure the protection you have actually fits your needs.

One more myth-adjacent detail that surprises people: your deductible and your payout method matter. A higher deductible can lower premiums but increases what you pay before coverage kicks in. And for belongings, policies may reimburse based on replacement cost or depreciated value depending on what you chose.

Bottom Line

Homeowners insurance isn’t one-size-fits-all. Believing myths can leave you underinsured—or worse, financially exposed. The key is simple: know what your policy covers, confirm what it doesn’t, and add coverage where your risk is real.

Your home is likely one of your biggest investments. Protect it with clarity, not assumptions.