Debunking Homeowners Insurance Myths for Connecticut Homeowners

Homeowners insurance often isn't top-of-mind until something goes wrong. Whether it's a tree through the roof, your basement flooding, or something else, it's crucial to understand your policy. Myths about homeowners insurance abound, so let's clear them up to help you make informed decisions about your home's protection, especially here in Connecticut.

Myth #1: Homeowners Insurance Covers Everything

One major misconception is that homeowners insurance covers all types of damage or disasters. While many policies provide broad protection, there are exclusions. For example, standard policies typically do not cover:

• Flood damage. Connecticut residents often need a separate flood insurance policy through the National Flood Insurance Program (NFIP) or private insurers because standard policies don't include this coverage.
• Earthquake damage. Though rare in Connecticut, earthquake coverage is usually available as an add-on or a separate policy.
• General wear and tear or maintenance issues. Insurance is aimed at sudden and accidental damage, not for ongoing issues due to neglect or aging.
• Sewer backups. Standard policies generally exclude sewer or drain backups, but many insurers offer riders for additional protection.

Understanding what's included—and what's not—in your policy is crucial.

Myth #2: My Home is Insured for Its Market Value

Many homeowners in Connecticut assume their insurance should match the market value of their home. However, insurance is based on rebuilding costs, not resale value. Market value includes the land and location, while replacement cost focuses on materials and labor to reconstruct the home pre-damage. Given the fluctuating construction costs in Connecticut, it's essential to review your policy regularly to ensure adequate coverage.

Myth #3: If Someone Gets Hurt on My Property, It’s Always Covered

Your homeowners insurance does offer liability coverage if someone hurts themselves on your property, but there are exceptions. If negligence (like ignoring a rotting deck railing) is a factor, you could still face lawsuits beyond your policy limits. Additionally, if you run a home-based business and a client gets injured, your standard policy typically won't cover this.

Myth #4: My Policy Covers My Valuables Fully

Standard policies often have caps on expensive items such as jewelry, artwork, and high-end electronics. What this means is that in the event valuable items are lost, stolen, or damaged, your policy might only cover a fraction of their worth. For high-value items, you can add a scheduled personal property endorsement to insure them for their full value. It's wise to periodically review your policy, get professional appraisals, and keep an updated inventory of your belongings.

Myth #5: I Don’t Need Additional Insurance Because I Work from Home

With remote work becoming more common, Connecticut residents might assume their standard insurance fully covers work-related equipment and activities. This is not always true. Standard policies may have limits on the value of business property they reimburse and often don't cover employer-owned equipment at all. Additionally, business-related liability isn't typically included.

Coverage Options:

• Home-based business policy. Offers broader protection for business property and liability.
• Business property endorsement. Increases coverage limits for work-related equipment.
• Commercial liability coverage. Protects against lawsuits if someone gets injured while visiting for business purposes.

Make sure your insurance covers all your needs before an unexpected loss occurs.

Myth #6: Homeowners Insurance Covers Mold and Termite Damage

Mold and pest damage are generally considered preventable maintenance issues and not sudden or accidental damage, which is why most policies don't cover them. If mold results from an insured peril—say, water damage from a burst pipe—your policy might cover remediation. However, if it's due to long-term humidity or leaks that weren’t addressed, you're likely on your own.

Myth #7: If My Neighbor’s Tree Falls on My House, They Pay for It

This one surprises many Connecticut homeowners. Typically, your insurance covers damage to your property, regardless of where the tree came from. If your neighbor was negligent, however, such as knowing a tree was dead and not dealing with it, you may be able to file a claim with their insurance or take legal action.

Myth #8: Filing a Claim Always Leads to Higher Premiums

Not necessarily. Insurance companies consider various factors when adjusting rates, including claims history, claim type, and location. A single small claim may not impact your premium much, but frequent claims or high payouts could raise your rates. Always weigh the cost of repairs against your deductible before filing a claim.

Final Thoughts

Homeowners insurance is an essential protection, but one size does not fit all. Understanding your coverage can help you avoid costly surprises. If you're unsure about your policy, it's wise to review it with your insurance agent to ensure you have the right protection in place. Have questions about how your homeowners insurance affects your real estate decisions here in Connecticut? Let's talk.