Home Insurance Misconceptions & Misunderstandings

Let’s face it. Insurance isn’t much fun to think about, and maybe that’s part of the reason that many people don’t understand their home insurance coverage as well as they could. You don’t need to be an expert in home insurance to buy a policy. Your agent or broker can help you identify areas where you need protection. But it’s helpful to address some common misconceptions about what home insurance can and can’t do.

Can home insurance pay for my new roof or water heater?
​
Damage due to wear and tear is part of owning a home. Roofs wear out. Water heaters break. Plumbing springs a leak, sometimes. While home insurance can’t pay for wear-related damage such as an old roof that needs to be replaced, your home insurance can cover part of the cost if your roof becomes damaged due to certain other causes, like a falling branch or a powerful storm.

Similarly, if your plumbing springs a leak, your home insurance can’t pay the plumber to fix the pipes. However, if the leak caused sudden damage, your policy may be able to help with the cost of repairs to your home.

Does home insurance cover earthquakes and floods?

For some homeowners, the risks from earthquakes or floods may be higher; for others, these risks may be much lower. This is one reason that home insurance providers usually exclude coverage for earthquake and flood insurance on a standard policy. Exclusions are risks that aren’t covered.

Instead, you can purchase separate coverage for floods or earthquakes if those risks are a concern where you live. Ask your agent or broker about your coverage options and costs.

Does home insurance pay for the entire loss?

Part of the role of insurance is to provide affordable coverage. If a home insurance policy covered every possible risk and paid 100% of every claim, many households wouldn’t be able to afford a policy. Instead, insurers use deductibles to help keep premiums lower. 
The deductible is the part of the claim paid by the policyholder. Home insurance policies often require a deductible of $1,000 or more and may have special deductibles that are triggered by certain types of losses, such as wind and hail. 

When you have a covered claim, the insurer “deducts” the amount of your chosen deductible from the claim payout. For example, if you have $5,000 in damage after a pipe burst in your home and you have a $1,000 deductible, the insurer would pay $4,000 for the claim.

Review your coverage

Insurers recommend a periodic policy review to be sure your coverage meets your needs. Life changes, often quickly, and it’s important that your coverage changes to meet your new situation. If you haven’t reviewed your coverage lately, reach out to your agent or broker to schedule a review. Often, you’ll uncover better ways to protect your home and perhaps even some ways to save money.