A home is the biggest purchase that you may ever make. You worked hard to buy it. You need to protect your investment.
Buying homeowners insurance is an important part of protecting your home. But it isn’t always a simple process. There are many moving parts, different types of coverage, and prices that are all over the map.
Understanding these five common mistakes people make when buying homeowners insurance can help you avoid them.
1. Getting the Wrong Type of Insurance
Buying homeowners insurance isn’t a one-size-fits-all process. It’s based on your home’s value and your financial circumstances.
When comparing insurance costs, consider what you are getting. You have various options for insurance coverage.
Your homeowner’s policy will cover the cost of damage to your home caused by fire, storms, and lightning, but it may not cover your possessions or secondary structures like driveways and detached garages.
Content insurance will cover your belongings but won’t pay for damage to your home. It also may not provide enough coverage for expensive collectibles, jewelry, or antiques. That might require scheduled personal property insurance.
Discuss your needs with your homeowner’s insurance provider to be certain you have the right coverage.
2. Underinsuring Your Home and Possessions
It’s tempting to sacrifice insurance coverage to keep your premiums low. That would be a mistake. Buying insurance that doesn’t fully cover your damages could leave you with unexpected bills.
It’s important to understand the value of your home and your possessions. That means researching the cost of building materials and labor in your area.
You’ll also need to take a thorough inventory of your personal property. Be sure to insure it at replacement cost and not just its cash value.
3. Setting the Wrong Deductible Amount
Your insurance deductible is the amount you pay out of pocket when you make a claim. If you have a $1,000 deductible, your homeowner’s insurance provider will deduct that amount from your claim check.
Your deductible has an inverse relationship with your insurance premium. So, the higher your deductible, the lower your insurance cost and vice versa.
Before setting your deductible amount, carefully consider how much cash you would have available to cover the deductible should you have a claim.
4. Not Understanding Policy Limits and Exclusions
It’s a mistake to assume that insurance for homes covers everything. Your insurance terms and conditions will include some limits and exclusions.
For instance, earthquake and flood damage aren’t covered on most homeowner policies. You have to buy a rider to add them.
Even if you don’t live in a flood plain, you may need flood insurance. Standard insurance for homes won’t cover damages if your house is flooded by melting snow, an overflowing creek, or water running down a steep hill.
5. Buying Homeowners Insurance Based Only on Price
When comparing insurance costs, be sure to compare the policy terms, including limits and exclusions. Make certain that lower-cost insurance policy won’t leave you unprotected when you need it most.
Keeping your insurance premiums low is important, but not if it means sacrificing the coverage you need.
Finding the Right Coverage for Your Home
You have a lot of options for insurance. Coverages, premiums, deductibles, limitations, endorsements, and riders differ among companies.
That can make buying homeowners insurance a complex process. Fortunately, you don’t have to go it alone.
Insured ASAP specializes in finding the right insurance quotes for you. Need a review of your current policy or assistance shopping for a new one? We’re here to help.
Contact Insured ASAP today to get started.
