When shopping for insurance, misinformation can be as costly as a lack of coverage. Believing myths about homeowners insurance can lead to coverage gaps that fail to account for common or unforeseen types of damage. We’ve compiled this list of common myths and misconceptions for Illinois homeowners to help them avoid serious financial losses due to inadequate or incorrect policies.
Myth #1: Standard Policies Cover Every Event
Homeowners insurance policies cover many catastrophic events, such as weather damage, fire, and theft. However, standard insurance policies often contain numerous exclusions for more specific types of damages. Failing to recognize these coverage gaps can result in a denied claim, leaving the homeowner to foot an expensive bill.
For example, many standard policies omit common types of damage, such as flood damage, mold, or sewage backup. Even certain types of weather damage or wear, such as predicted wear and tear, often fall outside of normal policy coverage. Homeowners are responsible for making sure their homes and assets are protected against foreseeable events. This includes recognizing any exclusions on their standard policies and purchasing add-ons, endorsements, or separate policies to cover these events.
Myth #2: Personal Items are Protected by Homeowners Insurance
The coverage offered by homeowners insurance policies often does not extend to all personal property. In the fine print, policies often include value caps and other restrictions, which can lead to denied claims for high-value items. Since these are likely the items that homeowners most want to protect, the myth of personal belongings coverage can lead to serious losses.
For jewelry, art, electronics, and valuable collections, homeowners likely need scheduled personal property endorsements added to their policies. Without these endorsements, reimbursement claims will likely be denied in part or even in full following a fire, theft, or other disaster. Homeowners should conduct a thorough home inventory and update their policies with any endorsements needed to protect their most valuable items.
Myth #3: Insurance Should Match Market Value
Many homeowners mistakenly believe that their insurance needs are equal to their home’s current market value. However, when making a claim or rebuilding a home after a disaster, they often discover that market value is not the right metric to gauge the coverage they need.
Instead, policies should be based on the full replacement cost of the home, which includes current material and labor prices in Illinois. Especially for suburban homeowners, rising material and labor costs can lead to out-of-pocket expenses that could have been covered with the right liability limit.
Myth #4: Making a Claim Automatically Raises the Premium
This myth has a basis in fact, but many homeowners misconstrue or exaggerate its meaning. While it is true that a claim can trigger an insurance premium hike, the way these increases work is often misunderstood.
Insurers include the homeowner’s personal claims history in their risk assessment. Therefore, a higher average claim size can result in a more significant risk increase. However, the type of claim makes a difference. If many homeowners were impacted by storm damage, for example, a large claim may not impact an individual’s risk assessment. Frequent home break-ins, on the other hand, would be more likely to initiate a policy change.
The rules that govern fair conduct in homeowners insurance are determined by each state’s laws. For example, the Insurance Rate Transparency Law will take effect in Illinois beginning in 2026, requiring insurers to post rate changes, 5-year averages, and other annual percentage updates. This will help homeowners dispel the myth that all claims result in premium hikes and more accurately track their insurance rates, including any claim-related changes.
Myth #5: Homeowners Insurance Covers Home Businesses
Many homeowners mistakenly believe that their homeowners insurance policy covers their home-based business. However, equipment and liability related to the business are likely not covered by standard policies. Claims may be reduced or denied based on the impact that the business has on the home, so homeowners should ask about separate business insurance riders or home-based business policies to make sure their home and assets remain covered.
Myth #6: Buying a Home is the Only Time to Review Insurance
Most homeowners do not enjoy reviewing, updating, and calculating their insurance policy needs, so many neglect to update their policies. Over time, this can lead to unexpected coverage gaps, denied claims, and financial losses.
Many aspects of life can change and warrant a policy review, including:
- Changing insurance requirements
- Starting a home-based business
- Acquiring new valuables
- Starting home renovations
Homeowners should consult a licensed insurance agent in Illinois at least once a year to make sure their policy aligns with their current liability needs. Changes both within and outside the homeowner’s control can significantly alter the coverage they need to protect their home, property, and belongings in case of disaster.
Partner with an Experienced Local Firm to Get the Homeowners Insurance Coverage You Need
At Pro Insurance Group, our team of local experts helps homeowners dispel common myths and misconceptions about their coverage. Contact our team today to learn how your situation impacts your real insurance coverage needs. Our team of knowledgeable professionals can help you find peace of mind with a customized policy that fits your situation.