Top 5 Misconceptions About Home Insurance

PHOTO: Misconceptions about homeowners insurance can be costly.
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Imagine a nightmare scenario in which you learn your home needs mold remediation, costing tens of thousands of dollars. Many people incorrectly believe that a standard home insurance policy will protect against mold damage, but they are in for a rude awakening, said Laura Adams, senior insurance analyst with

But if you believed it should have been covered, you're not alone. According to a telephone survey of 1,003 adults living in the U.S., 41 percent believed a standard homeowner's insurance policy would protect against mold damage.

Another 51 percent aren't aware that earthquake damage is not covered by a standard homeowner's insurance policy either.

Read more: When to Consider Renter's Insurance?

Here are five misconceptions about homeowner's insurance that could cost you:


Home insurance covers all your possessions.

Adams said there are categories of personal belongings, such as jewelry, cash, silverware and firearms that typically have caps on coverage.

"For instance, your policy may cover $10,000 for jewelry only, unless you opt to pay for additional coverage," she said.


19175865 Home insurance pays for mold damage.

Adams said standard homeowners policies generally don't cover mold damage that results from neglected maintenance, such as a leaky faucet or pipe.


Home insurance includes flood damage.

Standard homeowners' policies don't cover floods—a separate flood policy is required. Where a home is located, such as along a shoreline, and the type of natural disaster is taken into account for coverage.

Read more: Top 6 Myths, Facts About Flood, Hurricane Insurance


Auto insurance covers a theft from your vehicle.

Home insurance covers theft of your personal belongings from a vehicle, even if the crime occurs away from your property, Adams said.


Home insurance should be equal to the market value of a property.

"Coverage for your dwelling should be based on the cost to replace the structures on your property, but should never include the value of your land," Adams said.

Read more: When to Consider Renter's Insurance?

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