The most common homeowners insurance myths in Louisiana: that "full coverage" exists (it doesn't), that flood damage is included in your homeowners policy (it's not), that your policy covers what your home could sell for (it covers rebuild cost instead), and that filing a claim won't show up if you don't get a payout (it will). We hear these misconceptions constantly from first-time buyers and from people who've been insured for 20 years. Here are seven of the most common ones and what's actually true.
"My Insurance Should Cover What My Home Is Worth"
This is one of the most common points of confusion we see, and it goes both directions. Some homeowners think their coverage is too high ("why am I insured for $350,000 when my house is only worth $250,000?"). Others think it's too low ("my home is worth $500,000 but my policy only covers $320,000"). Both reactions usually come from the same misunderstanding: mixing up market value and replacement cost.
Your home's market value is what someone would pay to buy it. That number includes the land, the neighborhood, the school district, proximity to work, all kinds of factors that have nothing to do with the physical structure. Your policy's dwelling coverage is based on replacement cost, which is what it would take to rebuild your house from the ground up. Just the structure. Materials, labor, permits.
Those two numbers can be very different. A modest home in a desirable Baton Rouge neighborhood might sell for $400,000 but cost $280,000 to rebuild. A large custom home in a rural parish might sell for $300,000 but cost $450,000 to rebuild because of high-end materials and specialty labor. Neither number is wrong. They're just measuring different things.
If you've been looking at your Zillow estimate and comparing it to the dwelling coverage on your declarations page, that's the disconnect. Your agent can walk you through how your replacement cost was calculated and whether it still reflects what rebuilding would actually cost today.
"My Home Insurance Covers Flooding"
It doesn't. Standard homeowners insurance in Louisiana does not cover flood damage. If water comes up from the ground, rises from a bayou, or backs up from storm surge, your homeowners policy won't pay for it.
Flood coverage requires a separate policy, either through the National Flood Insurance Program (NFIP) or a private flood carrier. And this isn't a minor technicality. In the 2016 Baton Rouge floods, thousands of families found out they had no flood insurance because they weren't in a designated high-risk zone. But 25% of all NFIP flood claims come from outside those high-risk zones. Homeowners in New Orleans, Lafayette, and communities along the Amite and Comite rivers learned this the hard way.
If you own a home in Louisiana, flood insurance is worth a serious conversation with your agent regardless of your flood zone. We've written more about this in our guides on whether you need flood insurance and the differences between NFIP and private flood coverage.
Get Your Free Quote
Still researching?
Learn About Home Insurance
"My Mortgage Company Is My Insurance Company"
This one comes up all the time, and it causes real confusion when something goes wrong. Your mortgage company is not your insurance company. They're separate businesses that interact in one specific way: escrow.
Here's how it works. When you have a mortgage, your monthly payment usually bundles together your loan principal, interest, property taxes, and insurance premium. Your mortgage company (or their servicer) collects all of that in one payment and distributes it to the right places. They forward your insurance premium to your actual insurance carrier on your behalf.
So when your monthly payment goes up, it's not always because your insurance went up. It could be a property tax increase, an escrow shortage, or a change in your mortgage terms. And when something goes wrong with your policy, like a billing issue, a lapse, or a coverage question, your mortgage company can't help you with that. Those issues are between you, your insurance carrier, and your agent.
The confusion makes sense. You're writing one check every month and it all blends together. But knowing who actually handles what will save you a lot of frustration when you need answers fast, especially during a claim.
"Home Insurance Works Like a Home Warranty"
These are two completely different products from two completely different companies.
Home insurance covers sudden, accidental damage. A tree falls on your roof during a storm. A kitchen fire damages your walls and cabinets. Someone breaks in and steals your TV. Those are insurance claims.
A home warranty covers mechanical breakdown from normal wear and tear. Your AC unit stops working because it's 15 years old. Your water heater rusts out. Your dishwasher gives up. Those are warranty claims.
The line is basically this: insurance is for unexpected events, a warranty is for things that wear out over time. Your insurance company isn't going to replace your HVAC system because it died of old age, and your home warranty company isn't going to rebuild your roof after a hurricane.
This distinction matters because it sets the right expectations. If your AC breaks in July (and in Louisiana, it will eventually), that's a maintenance issue, not an insurable event. On the other hand, if a power surge caused by a lightning strike fries your AC compressor, that is something your homeowners policy could cover.
"Filing a Claim Won't Show Up If I Don't Get a Payout"
This one catches people off guard. Every claim you file gets recorded on your CLUE report (Comprehensive Loss Underwriting Exchange), regardless of whether you received a payout. Filed a claim and then withdrew it? It's on there. Filed a claim but the damage was under your deductible? Still on there.
Insurance companies check your CLUE report when you apply for new coverage and sometimes at renewal. Claims stay on that report for five to seven years. A history of claims, even small ones with no payout, can affect your premiums and which carriers are willing to insure you.
This doesn't mean you should avoid filing claims. That's what insurance is for. But it does mean it's worth pausing before you file for something close to your deductible. If you have a $2,500 deductible and $3,000 in damage, the $500 payout might not be worth the mark on your record. That's a decision worth talking through with your agent before you pick up the phone to file.
"Getting a Home Insurance Quote Will Hurt My Credit"
It won't. Insurance companies don't pull your credit score the way a bank does when you apply for a loan. Instead, they use something called an insurance score, which is generated through LexisNexis. Your insurance score is based on some of the same financial data as your credit score, but it's a separate product built specifically for insurance underwriting. Pulling it is a soft inquiry that has zero effect on your credit score.
Hard inquiries, the kind that actually affect your credit, come from loan applications, credit card applications, and similar financial products. Insurance quotes aren't in that category.
This myth keeps people from shopping around, and that's a real problem. Rates vary a lot between carriers in Louisiana. We regularly see $1,000+ differences between the cheapest and most expensive quote for the same home in Baton Rouge. In New Orleans, where premiums run higher, the spread can be even wider. In Shreveport, where rates tend to be lower, there's still meaningful variation between carriers. If you've been avoiding quotes because you thought they'd ding your credit, they won't.
"I Can't Switch My Insurance Until My Renewal Date"
You can switch your homeowners insurance at any time. You're not locked in until your renewal date. If you find better coverage or a better price mid-policy, you can make the switch and get a prorated refund for the unused portion of your premium from your old carrier.
The process is straightforward. Your new carrier writes the policy, your old carrier cancels the existing one, and you get back whatever you already paid for the time you won't be using. If your insurance is escrowed through your mortgage company, your agent and the new carrier handle notifying the mortgage servicer.
There are a few exceptions worth knowing about. If your current policy is through Louisiana Citizens (the state's insurer of last resort), there may be restrictions under newer depopulation guidelines. And surplus lines policies sometimes have different cancellation terms. But for the vast majority of standard homeowners policies in Louisiana, you have the freedom to switch whenever it makes sense for you.
What We Tell Our Clients
Most of these myths stick around because the insurance industry hasn't done a great job of explaining how things actually work. We spend a lot of time clearing up these exact misconceptions, sometimes before a client buys a policy and sometimes after years of being insured somewhere else.
The best thing you can do is ask questions. Pull out your declarations page and go through it with your agent. Ask what's covered, what's not, and where you might have gaps. If your current agent can't or won't explain your policy in plain English, that's worth thinking about.
For a closer look at what goes into a homeowners policy and how to pick the right one, check out our guide on how to choose the right homeowners insurance in Louisiana. And if you're curious about what you're paying compared to the rest of the state, here's what home insurance costs across Louisiana.
Frequently Asked Questions
Does homeowners insurance cover my home's market value?
No. Your policy covers the replacement cost to rebuild your home's structure, not its market value. Market value includes land, location, and neighborhood factors that have nothing to do with reconstruction. A $400,000 home might cost $280,000 to rebuild, or a $300,000 home might cost $450,000 if it has custom materials.
Does filing a small claim raise my insurance rates?
It can. Every claim you file gets recorded on your CLUE report, which insurance companies check when pricing your policy. Claims stay on that report for five to seven years. For small claims close to your deductible, the payout may not be worth the mark on your record.
Can I switch home insurance carriers mid-policy?
Yes. You're not locked in until your renewal date. You can switch at any time and receive a prorated refund for the unused portion of your premium. Your new carrier and agent handle the transition, including notifying your mortgage company if your insurance is escrowed.
Want to see if there are better options for your home? Get a free quote and we'll walk through it with you.
