Understanding Homeowners Insurance on the North Shore

Homeowners insurance is something people tend not to think about until they really need it. By the time you're dealing with an issue—a tree falls on the roof, a burst pipe floods your basement, or something more serious—it's too late to address misunderstandings about your policy. Let's straighten out some common myths about homeowners insurance so you can make informed decisions about your home's protection.

Myth #1: Homeowners Insurance Covers Everything

One of the biggest misconceptions is that homeowners insurance covers every type of damage or disaster. While many policies provide extensive protection, there are exclusions. For instance, standard policies typically don’t cover:

• Flood damage. Homeowners usually need to purchase separate flood insurance through the National Flood Insurance Program (NFIP) or private insurers.
• Earthquake damage. Coverage for this is often available as an add-on or a separate policy.
• General wear and tear or maintenance issues. Insurance is designed to cover sudden and accidental damage, not deterioration over time.
• Sewer backups. Standard policies generally do not cover sewer or drain backups, but insurers often offer a rider for additional protection.

Reading your policy thoroughly and understanding what’s covered—and what’s not—before assuming you’re protected is crucial.

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

Many homeowners assume their insurance should match what their home would sell for on the market. 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 before the damage occurred. With fluctuating construction costs on the North Shore, it’s essential to review your policy periodically to ensure you have adequate 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—for instance, if you ignored a rotting deck railing that finally gave way—you could 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. While your policy may provide some protection, it often comes with caps that may be far lower than the actual value of your belongings. This means that if a valuable item is lost, stolen, or damaged, your standard policy might only reimburse a fraction of its worth.

If you own high-value items that exceed these limits, you can add a scheduled personal property endorsement or rider to specifically insure them for their full appraised value. This provides broader protection, including coverage for accidental loss or damage that standard policies often exclude. To ensure adequate protection, it’s wise to periodically review your policy, get professional appraisals for valuable items, and keep 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 homeowners assume their standard insurance fully covers work-related equipment and activities—but this isn’t always the case. While a standard homeowners policy may offer limited coverage for business property, it often has restrictions on the amount 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 may only reimburse up to a certain amount and might not cover employer-owned equipment.
• No business liability protection. If a client, customer, or delivery person is injured on your property, you could be held 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 ensure you’re fully covered, consider the following 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 is injured while visiting for business purposes.

If you work from home, 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. But 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—for example, 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 may not impact your premium much—but frequent claims or a history of high payouts could raise your rates. That’s why it’s important to weigh the cost of repairs against your deductible before filing.

Final Thoughts

Homeowners insurance is an essential safeguard, 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, it’s a good idea to sit down with your insurance agent to review your policy and ensure you have the right protection in place.

Have questions about homeowners insurance and how it affects your real estate decisions on the North Shore? Let's chat.