Home Insurance: Separating Myth from Reality
Here are some of the most common home insurance myths, along with the facts every homeowner should know.
Myth 1: “My policy covers the full value of everything in my home.”
Fact: Coverage limits vary, and some items have capped amounts.
While home insurance protects your belongings, certain high-value items, such as jewellery, art, collectables, and specialty sports equipment, often have specific limits. For example, jewellery may only be covered for a fixed amount (ex: $6,000), even if the replacement cost is higher.
What to do: If you own expensive items, ask your broker about adding additional coverage to insure these items for their full replacement value.
Myth 2: “My home is covered even if it’s empty while I travel.”
Fact: Vacancies over 30 days must be reported, or coverage may be restricted or void.
Most home insurance policies classify a home as vacant after 30 consecutive days without occupants. If your insurer is not notified, coverage for key risks such as water damage, vandalism, or theft may be limited or void altogether.
This is especially important for:
- Snowbirds
- Cottage owners
- People selling a home
- Extended hospital stays or long work trips
Your broker can help arrange a vacancy permit to keep your coverage active.
Myth 3: “Everything on my property, such as sheds or garden suites, is fully covered.”
Fact: Detached structures have their own coverage limits.
Structures such as:
- Sheds
- Detached garages
- Garden suites
- Pool houses
- Workshops
are typically covered, but often with a percentage cap based on your main dwelling amount. Renovations or new structures may also require adjustments to keep your policy accurate.
If you upgrade or add anything, let your broker know to ensure proper coverage.
Myth 4: “If I have sewer backup coverage, I’m protected from all water damage.”
Fact: Not all water damage is the same when it comes to insurance coverage. Sewer backup is not the same as flooding, seepage, or maintenance-related leaks.
Sewer backup coverage is optional and smart, but many homeowners misunderstand what it includes.
Most standard policies exclude:
- Overland flooding (water entering from overflowing lakes or rivers)
- Groundwater seepage
- Water damage from poor maintenance (e.g., failed sump pumps, deteriorated seals, long-term leaks)
Separate coverage options exist for overland water, sewer backup, and other water protection. A broker can help you combine the proper endorsements for full protection.
Myth 5: “Home-based businesses are automatically covered.”
Fact: Most home insurance policies offer no or minimal protection for business activities.
Whether you run a small online shop or a full-time professional service from home, business equipment, inventory, and liabilities are usually not covered under a standard homeowner policy.
Depending on your situation, you may need:
- A home business endorsement
- A commercial policy
- Liability protection for customers or deliveries
- Equipment or inventory coverage
Not disclosing your home business and having the proper coverage in place could put a claim at risk.
Misinterpreting home insurance details can leave homeowners unexpectedly vulnerable. Knowing the truth about limits on valuables, special rules for vacant homes, water-damage exclusions, and coverage for home-based businesses helps ensure your policy accurately reflects your lifestyle and property. A clear understanding of what your policy covers and doesn’t is essential to protecting your home.