By Brandon Thompson, MBG Insurance — Bentonville, AR
For most homeowners in Bentonville, Rogers, Fayetteville, Springdale, and across Northwest Arkansas, your home is your most valuable asset — yet most people only scratch the surface of what a homeowners insurance policy actually does for them. Here are five common myths and misconceptions worth clearing up.
Myth 1: After a covered loss, all I pay is my deductible.
Your homeowners policy is typically built around either Actual Cash Value or Replacement Cost Value, and this can apply to your entire home or to major systems like your roof — which matters a lot in a region that sees its share of hail and wind damage.
Actual Cash Value settlement pays what the damaged item was worth today, minus depreciation. Say your roof is 15 years old and insured on an Actual Cash Value basis — your claim settlement will typically be reduced based on the roof’s age and condition at the time of loss. That can leave you paying out of pocket for part of a new roof, on top of your deductible.
Replacement Cost settlement pays what it actually costs to replace what was damaged, at the time of loss. With that same 15-year-old roof, a Replacement Cost policy repairs or replaces it minus the deductible. Carriers typically issue an initial Actual Cash Value payment, then a second payment for “recoverable depreciation” once the repair or replacement is complete.
Some homes only qualify for Actual Cash Value settlement, depending on age, roof type, or the carrier. The best move is reviewing your policy with your agent so you know exactly how a claim would settle before you ever need it to.
Myth 2: My homeowners insurance covers 100% of what I owe on my mortgage — that’s all I need.
No one wants to think about a total loss, but in Northwest Arkansas — an area that sees real severe weather risk from tornadoes and high wind events — it’s worth talking through. What matters isn’t your mortgage balance, it’s your home’s accurate replacement value.
Most carriers let you insure your home for full replacement value and beyond, often through “extended coverage limits” that add cushion in a catastrophic loss. After a major regional weather event, demand for materials, labor, and contractors spikes fast, and rebuilding costs can climb significantly within weeks. Accurate replacement values and extended limits are what get you back to whole, not just what’s left on the mortgage.
Myth 3: Home insurance only covers the home itself.
A homeowners policy is built to cover far more than the structure and your belongings:
- Liability coverage protects you or a household member if you’re found legally responsible for injury or property damage to others. Limits typically run $100,000, $300,000, or $500,000 — and the price difference between them is usually small compared to the protection gained.
- Loss of use helps cover the cost of living elsewhere if your home is uninhabitable after a covered loss.
- Other structures coverage extends to detached structures on your property — fences, sheds, detached garages.
- Many policies also extend to things like small watercraft, golf carts, shrubs, and more.
Read your policy and declarations page, and lean on a local agent when questions come up — that’s exactly what we’re here for.
Myth 4: Bundling my home and auto always gets me the best rate.
Bundling often does produce the best combined rate, but not always. In some cases, homeowners in Northwest Arkansas actually come out ahead by un-bundling and shopping each policy separately for the most competitive option. Every household’s situation is different — an independent agent who can shop multiple carriers is the best way to know which approach actually saves you money.
Myth 5: My homeowners policy covers earthquake damage.
Most carriers don’t automatically include earthquake coverage in a standard homeowners policy. Earthquakes aren’t something Arkansas homeowners think about often, but parts of the state — including areas of Northwest Arkansas — sit within reach of the New Madrid Seismic Zone, the most seismically active zone east of the Rockies.
If your carrier doesn’t offer an earthquake endorsement, standalone earthquake policies are available through specialty carriers and can cover your home, personal belongings, and more.
Reminder: Every homeowner’s situation is different. These examples may not apply directly to your policy. Talk with your agent, broker, insurer, or legal counsel about your specific coverage and exposure.
About the Author
Brandon Thompson is CEO and co-founder of MBG Insurance, an independent agency serving Missouri and Arkansas. Originally from Pea Ridge, Arkansas, Brandon relocated back to Northwest Arkansas to open MBG’s Bentonville office, where he focuses on workers’ compensation, high-value home, lessor’s risk, and tree care risk. Read more on Brandon’s full bio page.