6 Common Home Insurance Mistakes to Avoid

Home insurance is one of the most important protections you can have as a homeowner, but not all policies are created equal. Choosing the wrong coverage—whether it’s going for the cheapest option, misunderstanding what’s included, or failing to update your plan—can leave you vulnerable to unexpected risks.

As real estate agents, we want our clients to have the right information to enjoy and protect their homes. Despite some dramatic headlines, home insurance companies aren’t the enemy—at least, not all of them!

To provide expert insights, we recently sat down with Philadelphia insurance specialist John Dwyer to discuss the most common home insurance mistakes homeowners make—and how to avoid them.

Mistake #1: Choosing an Insurance Company Based on Price Alone

Why This Matters:

Finding an affordable policy is important, but the cheapest option isn’t always the best. A low-cost policy might come with limited coverage, high deductibles, or exclusions that leave you unprotected when you need it most. Plus, not all insurance companies offer great customer service or have the financial strength to pay out claims quickly.

A Smarter Way to Choose Insurance:

Instead of just looking at price, compare coverage options, customer reviews, and financial stability. Working with an independent insurance agent can help—they aren’t tied to one company and can shop around to find the best policy for your needs. The goal is to get the right balance of price and protection!

Mistake #2: Not Knowing What Your Insurance Covers (and What It Doesn’t!)

Home insurance is there to protect your biggest investment from unexpected events like fires, storms, and falling objects. But it’s not a catch-all solution! It won’t cover regular wear and tear, maintenance issues, or damage caused by neglect. Plus, things like earthquakes, floods, and sewer backups usually aren’t included in a standard policy.

A Smarter Way to Protect Your Home:

If you live in an area prone to floods or earthquakes, consider getting a separate policy for extra protection. Some insurers also offer water backup coverage as an add-on. The best way to avoid surprises? Read your policy carefully and ask questions if anything isn’t clear!

Mistake #3: Not Understanding the Deductible

Why This Matters:

Your deductible is the amount you have to pay out of pocket before your insurance coverage kicks in. Some homeowners choose a low deductible to reduce out-of-pocket costs when filing a claim, but this usually means paying a higher premium each month. On the other hand, a higher deductible can lower your premium but requires you to pay more upfront in case of a claim.

A Smarter Way to Manage Your Deductible:

Find the right balance between your premium and deductible. If you have enough savings to cover a higher deductible, you could lower your monthly premium and save money in the long run. Before choosing, make sure you understand how your deductible affects your policy and overall costs.

🔹 Resource: The Insurance Information Institute (III) explains how deductibles work in home insurance: How Home Insurance Deductibles Work

Mistake #4: Only Getting the Minimum Coverage Required by Your Lender (or Dropping Insurance After Paying Off Your Mortgage)

Why This Matters:

Mortgage lenders require homeowners insurance to protect their investment, but their minimum requirement may not fully cover the cost of rebuilding your home in case of a disaster. Once the mortgage is paid off, some homeowners think they no longer need insurance—but that leaves them completely unprotected from unexpected events like fire, storms, or theft.

A Smarter Way to Protect Your Home:

Make sure your policy covers the full replacement cost of your home, not just the market value. Labor and material costs can be much higher than what your home is worth on the market, so reviewing and updating your coverage regularly is essential. Even if your home is paid off, keeping insurance ensures you're financially protected against costly damages or losses.

Mistake #5: Not Reviewing or Updating Your Policy

Why This Matters:

Life changes, and so do your insurance needs. If you’ve renovated your home, added valuable belongings, or even experienced changes in local building costs, your current policy might not fully protect you. Sticking with the same policy for years without reviewing it could leave you underinsured when you need coverage the most.

A Smarter Way to Protect Your Home:

Review your policy every two to three years—or whenever you make major changes to your home. Request a written statement outlining your current coverage details so you can spot any gaps.

This is another reason why working with an independent insurance agent can be beneficial. They can compare policies from different providers and help you switch to a plan that better fits your evolving needs. Always keep a written record of any changes to your policy to ensure you have the right level of protection.

Mistake #6: Overlooking the Importance of Liability Coverage

Why This Matters:

Liability coverage protects you if someone gets injured on your property and decides to sue. Many homeowners assume their standard policy includes enough liability protection, but that’s not always true. If a serious injury happens, legal fees and medical bills can quickly exceed your coverage limits, leaving you financially vulnerable.

A Smarter Way to Protect Yourself:

Make sure your liability coverage is high enough to protect your assets. The standard limit is usually $100,000, but increasing it to $300,000 or more can provide extra security—especially if you have features like a swimming pool, trampoline, or frequently host guests. If you have significant assets, consider an umbrella policy for even more protection.

Conclusion:

Your home is one of your biggest investments, and the right insurance policy gives you peace of mind when life throws the unexpected your way. By understanding your coverage, choosing the right deductible, and keeping your policy up to date, you can ensure you're fully protected. Take the time to review your insurance regularly and ask questions when needed—your future self will thank you!

A big thank you to John Dwyer from Dwyer Insurance for helping us debunk common myths and highlight the mistakes homeowners often make with their insurance. As an independent insurance agency with appointments at over 18 carriers and access to several wholesalers, Dwyer Insurance offers competitive rates for all types of risks. Whether you're insuring a million-dollar Main Line home or a North Philadelphia fixer-upper, they can help you find the right coverage at the best price. Feel free to contact for expert guidance!