What are some Homeowners Insurance Misconceptions in Greenwood Indiana?
5 Common Homeowners Insurance Misconceptions
******This can not be stressed enough: Always read your policy carefully so you know what’s included—and what’s not—before assuming you’re fully protected. Ask your insurance agent if you do not understand something or concerned about something being covered and limits*******
When it comes to homeowners insurance, there’s a lot of misinformation out there. Many homeowners assume their policy protects them from every possible disaster, but the truth is a little more complicated. Let’s clear up five of the biggest misconceptions so you can make sure you’re properly covered!
Misconception #1: My Home is Insured for Its Market Value
Many homeowners think their insurance coverage should match their home’s market value. In reality, insurance is based on cost to rebuild, not resale value. Market value includes things like land and location, but replacement cost focuses on what it would take to rebuild your home with current labor and materials. Since construction costs fluctuate, it’s smart to review your policy regularly to make sure you have enough coverage.
Misconception #2: Homeowners Insurance Covers Everything
Wouldn’t it be great if this were true? Unfortunately, homeowners insurance doesn’t cover every type of damage or disaster. Standard policies typically exclude things like:
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Sewer backups. This isn’t covered in standard policies, but you can often add a rider for extra protection.
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General wear and tear. Insurance is for sudden and accidental damage, not issues that happen over time due to neglect or aging
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Flood damage. You’ll need a separate flood insurance policy, usually through the National Flood Insurance Program (NFIP) or a private insurer.
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Earthquake damage. This coverage is available as an add-on or separate policy, depending on your provider.
Misconception #3: Filing a Claim Always Increases My Premiums
Not necessarily! Insurance companies look at several factors when adjusting rates, including your claims history, the type of claim, and where you live. A single small claim might not have much impact—but filing multiple claims or having high payouts could raise your rates. Before filing, weigh the cost of repairs against your deductible to see if it’s worth it.
Misconception #4: If My Neighbor’s Tree Falls on My House, They Have to Pay for It
This one surprises a lot of people. In most cases, your insurance covers damage to your property, no matter where the tree came from. However, if your neighbor was negligent—say they knew the tree was dead and ignored it—you might be able to file a claim with their insurance or take legal action.
Misconception #5: I Don’t Need Extra Insurance Because I Work from Home
With more people working remotely, many assume their homeowners policy covers work-related equipment and activities—but that’s not always the case. Your standard policy might offer some coverage, but usually with restrictions on:
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Business liability. If a client or delivery person is injured on your property, you could be personally responsible.
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Business inventory. If you store products or materials at home, your policy likely won’t cover theft, fire, or other damage.
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Work equipment. Your policy may only cover up to a small amount and may not protect employer-owned equipment at all.
To make sure you’re fully covered, you might need a home-based business policy, a business property endorsement, or commercial liability coverage. Checking with your insurer now can help you avoid an expensive mistake later.
The Bottom Line
Homeowners insurance is essential, but it’s important to understand exactly what your policy covers. By staying informed and reviewing your coverage regularly, you can avoid surprises and make sure you’re protected when you need it most!
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