Homeowners Insurance Myths: Separating Fact from Fiction in 2025

Homeowners insurance often doesn't get much attention until it's urgently needed. When a tree crashes through your roof, a pipe bursts and floods your basement, or something worse happens, understanding your policy's details becomes critical. There are plenty of myths about homeowners insurance, so let’s set the record straight to help you make informed decisions about protecting your home.

Myth #1: Homeowners Insurance Covers Everything

One big misconception is that homeowners insurance covers all types of damage or disaster. While policies provide broad protection, they come with exclusions. For example, standard policies typically don’t cover:

• Flood damage. Homeowners in areas like Malibu or Oxnard near water should consider separate flood insurance through the National Flood Insurance Program (NFIP) or private insurers.
• Earthquake damage. In earthquake-prone areas like Northridge, adding coverage for earthquakes can be crucial.
• General wear and tear or maintenance issues. Insurance handles sudden and accidental damage, not deterioration over time due to neglect or aging.
• Sewer backups. Policies generally exclude sewer or drain backups, but many insurers offer riders for extra protection.

Reading your policy to understand what's covered—and what isn't—is crucial for avoiding surprises.

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

Many believe their insurance should match their home's market value. In reality, insurance is based on the cost to rebuild, not on resale value. Market value includes factors like land and location, while replacement cost focuses on materials and labor to reconstruct the home as it was. With fluctuating construction costs in places like Santa Monica or Thousand Oaks, reviewing your policy periodically ensures you have adequate coverage.

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

Liability coverage in a homeowners policy does cover injuries on your property but with exceptions. If an injury is due to neglect—like ignoring a rotting deck railing—you could be sued for damages beyond your policy limits. Additionally, if you run a home business and a client gets injured, the standard policy may not cover it.

Myth #4: My Policy Covers My Valuables Fully

Homeowners policies usually have limits for expensive items such as jewelry, artwork, collectibles, and high-end electronics. If a valuable item is lost, stolen, or damaged, your standard policy might only cover a fraction of its value. To ensure adequate protection, consider a scheduled personal property endorsement or rider for items like that rare guitar collection or prized art pieces in your Ventura home.

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

With more people working remotely in 2025, many assume their standard insurance fully covers work-related equipment and activities—this is often not the case. A standard policy may have limited business property coverage and may not cover employer-owned equipment at all.

Key coverage gaps include:

• Limited coverage for work equipment. Your policy may reimburse a certain amount but not cover employer-owned equipment.
• No business liability protection. You could be personally responsible if a client, customer, or delivery person is injured on your property.
• Business inventory may not be covered. If you store products or materials at home, your policy likely won’t protect against theft, fire, or damage.

Consider a home-based business policy, a business property endorsement, or commercial liability coverage to protect yourself fully.

Myth #6: Homeowners Insurance Covers Mold and Termite Damage

Mold and pest damage are generally considered preventable and not covered by most policies. If mold results from a covered event, like a burst pipe, your policy may cover remediation. However, mold due to long-term humidity or leaks left unchecked would not be covered.

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

This surprises many. Your insurance typically covers damage to your property, regardless of where the tree originated. If your neighbor was negligent, you might file a claim with their insurer or take legal action, but typically your insurance handles it.

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

Not necessarily. Insurers consider many factors, including your claims history, the type of claim, and location. A single small claim might not impact your premium much, but frequent claims could raise rates. In LA & Ventura County, reviewing these factors can help you decide whether to file a claim.

Final Thoughts

Homeowners insurance is essential but not a one-size-fits-all policy. Understanding what’s covered can help you avoid costly surprises. If you're uncertain about your coverage, sit down with your insurance agent to review your policy, ensuring you have the right protection in place.

Have questions about homeowners insurance and its impact on your real estate decisions in LA & Ventura County? Let's chat and make sure you're well-informed.