Insurance Myths That Could Cost You Thousands

Many insurance myths sound reasonable, get repeated often, and unfortunately aren’t discovered until after a loss occurs. Common misunderstandings about coverage can leave even well-insured people facing major out-of-pocket expenses. 

Here are some of the most common insurance myths—and the costly truths behind them.

Myth #1: “My Home Is Insured for What I Paid for It”

One of the most expensive misconceptions homeowners have is confusing market value with replacement cost.

Your homeowners insurance is meant to cover the cost to rebuild your home after a total loss—not what you paid for it or what it could sell for today. Factors like labor shortages, material prices, building codes, and local construction costs all affect rebuilding expenses.

If your coverage limit hasn’t been updated in years, your policy may fall short just when you need it most. Being underinsured could mean paying tens—or even hundreds—of thousands of dollars out of pocket.

Reality: Home insurance should be reviewed regularly to ensure coverage reflects current rebuilding costs, not past purchase prices.

Myth #2: “Flood Damage Is Covered by Homeowners Insurance”

This myth leads to more uncovered losses than almost any other.

Standard homeowners insurance policies do not cover flood damage, even if the water comes from heavy rain, melting snow, or storm surge. Flood coverage requires a separate policy.

What surprises many homeowners is that flooding doesn’t only happen in high-risk zones. In fact, a significant percentage of flood claims come from moderate- or low-risk areas.

Reality: If water rises from the ground and enters your home, homeowners insurance will not respond without a flood policy in place.

Myth #3: “I Don’t Have Enough Assets to Need Umbrella Insurance”

Many people believe umbrella insurance is only for the wealthy. In reality, umbrella policies are designed for anyone with income, a home, vehicles, or future earnings to protect.

Lawsuits from serious auto accidents, guest injuries, or dog bites can quickly exceed standard liability limits. Once those limits are exhausted, your savings, wages, and even future earnings may be at risk.

Reality: Umbrella insurance is often one of the most affordable ways to protect against large liability claims—and one of the most overlooked.

Myth #5: “I’ll Review My Insurance After Something Changes”

Waiting until “later” is one of the riskiest insurance strategies.

Home renovations, new drivers, expensive purchases, lifestyle changes, or inflation can all quietly create coverage gaps. Unfortunately, insurance only works if it’s updated before a loss occurs.

Reality: An insurance review with Scalzo, Zogby & Wittig will help prevent surprises.

The Upshot

Insurance myths can be expensive because they create false confidence. The best protection comes from understanding what your policies actually cover—and where they may fall short.

A brief conversation with one of our personal lines account managers can uncover gaps, correct outdated assumptions, and help ensure your coverage matches today’s risks—not yesterday’s.

Until next time,

Your SZW Team

SZW Insurance is your Utica area Trusted Choice™ independent insurance agent. Call us for a quote on insurance for your home, car, business, or life at 315.792.0000. Or request a quote here.