When it comes to protecting your house, having the right home insurance is important—but it's equally important to understand home insurance. Unfortunately, there are a lot of myths and misconceptions that keep homeowners underinsured, overconfident, or completely unaware of what's in their policy. At Sierra Mountain Insurance, we believe that homeowners should be empowered with the right information. Let's set the record straight and take a look at some of the most common home insurance myths you may still believe.
Myth #1: "Home Insurance Covers Everything"
Reality: One of the biggest misconceptions is believing that home insurance covers every possible loss. In reality, your standard policy doesn't cover everything. For example, damage from earthquakes, flooding, or even normal wear and tear will require separate coverages or add-ons.
Pro tip: Always read your policy's exclusions and talk to your agent about add-ons for risks that are common in your area—like wildfire coverage or earthquake coverage in California.
Myth #2: "My Home's Market Value Determines How Much Coverage I Should Have"
Reality: Your home insurance coverage should be based on your "rebuilding costs," NOT market value. Market value fluctuates based on a myriad of factors, but in the event of a loss, your rebuilding costs will be significantly more consistent.
Pro tip: To ensure you're properly protected, ask your insurance broker for a "replacement cost" estimate—not "market value."
Myth #3: "Renters Don't Need Home Insurance"
Truth: Even though you're renting, you still require insurance. While your landlord's insurance will cover the building, it won't protect your belongings inside the home. Renters insurance allows your possessions and liability to be insured at a very low cost.
Pro tip: Insurance gives everyone peace of mind—whether you own or rent, your possessions matter.
Myth #4: "Flood Damage Is Automatically Covered"
Truth: This is one of the costliest assumptions homeowners make. Flood damage is not typically provided in a standard home insurance policy. If you live in an area that experiences flooding, you will need to purchase additional flood insurance on top of a home insurance policy.
Pro tip: Review your area's risk map—even low-risk areas can flood if the weather changes unexpectedly.
Myth #5: "Older Homes Are Uninsurable"
Truth: It may be more expensive to insure an older home due to higher repair risks, but there are options to obtain desirable coverage. You can achieve great coverage with the right insurer and the right policy—designated heritage or vintage homes can enable full insurance coverage.
Pro tip: Conducting regular maintenance and updates (think wiring, roof, plumbing) may help lower your premium.
Myth #6: "Filing a Claim Will Automatically Raise My Premium"
Truth: Not every claim you file will raise your rate. Premiums depend on a number of factors like frequency of claims, the type of claim, and the severity of the claim. A couple of small claims may not even raise your rate!
Pro tip: Be upfront with your insurance agent about your claims history—they can help you determine if and when it's best to file.
Final Thoughts
Understanding your home insurance is as important as just having it. Myths may create dangerous holes in your protection, leaving you exposed when you least expect it. At Sierra Mountain Insurance, our purpose is to help homeowners separate facts from myths to find coverage that is truly the correct fit for your needs. Because when it comes to protecting your home, clarity is confidence.
Ready to uncover the truth about your coverage?
Talk to our experts at Sierra Mountain Insurance today—let's make sure we fully protect your home and peace of mind!