Debunking Common Homeowners Insurance Myths in Eastern North Carolina

Homeowners insurance often only crosses the mind when it’s needed most. By the time you're facing a disaster—like a tree crashing through the roof, a burst pipe flooding your basement, or worse—it’s too late to address any assumptions about your policy that might not be true. Let's clear up some common myths so you can make informed decisions about protecting your home in Eastern North Carolina.

Myth #1: Homeowners Insurance Covers Everything

A widespread assumption is that homeowners insurance will cover every type of damage or disaster. While policies do provide broad protection, they come with exclusions. For example, standard policies typically don’t cover:

• Flood damage: Homeowners in flood-prone areas like those along the Neuse River often need a separate flood insurance policy through the National Flood Insurance Program (NFIP) or private insurers.
• Earthquake damage: Although less common in Eastern North Carolina, earthquake coverage is available as an add-on or separate policy depending on the insurer.
• General wear and tear or maintenance issues: Policies cover sudden and accidental damage, but not deterioration over time from neglect or aging.
• Sewer backups: Standard policies generally don’t cover sewer or drain backups, but many insurers offer a rider for additional protection.

It's essential to read your policy and understand what's covered—and what isn't—before assuming you're protected.

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

Many homeowners think their insurance should match their home's market value. In reality, insurance is based on the cost to rebuild, not the home’s 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 construction costs fluctuating significantly in areas like New Bern and Jacksonville due to rebuilding efforts after recent hurricanes, it’s crucial to review your policy periodically to ensure you have enough coverage.

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

Liability coverage in a homeowners insurance policy does protect you if someone gets injured on your property, but there are exceptions. If the injury resulted from negligence—such as ignoring a rotted deck railing that eventually gave way—you could still be sued for damages beyond your policy limits. Additionally, if you run a business from home and a client gets injured, your standard policy might not cover it.

Myth #4: My Policy Covers My Valuables Fully

Most homeowners policies have coverage limits for expensive items like jewelry, artwork, collectibles, high-end electronics, and firearms. Your policy may provide some protection, but it often comes with per-item or category caps that may be much lower than the actual value of your belongings. If a valuable item is lost, stolen, or damaged, your standard policy might only cover a fraction of its worth.

If you own high-value items that exceed these limits, consider adding a scheduled personal property endorsement or rider to specifically insure them for their full appraised value. Ensure adequate protection by periodically reviewing your policy, getting professional appraisals for valuable items, and keeping an updated inventory of your possessions.

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

With more people working remotely, many assume their standard insurance fully covers work-related equipment and activities, but this is often a misunderstanding. While a standard homeowners policy may offer limited coverage for business property, it often has restrictions on the value of work equipment it will reimburse and may not cover items owned by your employer.

Key coverage gaps include:

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

To be fully covered, consider options like a home-based business policy, business property endorsement, or commercial liability coverage. Check with your insurer to ensure you have the right coverage before an unexpected loss occurs.

Myth #6: Homeowners Insurance Covers Mold and Termite Damage

Mold and pest damage are generally considered preventable maintenance issues, not sudden and accidental damage, which is why most policies don't cover them. If mold results from a covered peril—such as water damage from a burst pipe—your policy may help pay for remediation. However, if the mold is 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 a lot of people. In most cases, your insurance covers damage to your property, regardless of where the tree came from. However, if your neighbor was negligent—like if they knew the tree was dead and did nothing about it—you might be able to file a claim with their insurance or take legal action.

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

This isn't necessarily true. Insurance companies consider many factors when adjusting rates, including your claims history, the type of claim, and your location. A single small claim might not impact your premium much, but frequent claims or a history of high payouts could raise your rates. It's important to weigh the cost of repairs against your deductible before filing.

Final Thoughts:

Homeowners insurance is essential, but it's not a one-size-fits-all policy. Understanding what's covered and what isn't can help you avoid costly surprises down the road. If you're unsure about your coverage, take time to review your policy and ensure you have the right protection in place.

Questions about homeowners insurance and how it affects your real estate decisions in Eastern North Carolina? Let’s chat.