A home insurance policy is designed to cover the cost of rebuilding your home and replacing your possessions in the event of a catastrophic loss. Whether you’re buying a new home, renewing your home insurance policy, or simply purchasing this important coverage for the first time, it’s essential to make careful decisions regarding your policy. Unfortunately, many homeowners don’t understand the specifics of their home insurance policy until it’s time to file a claim. Mistakes made while purchasing the policy can leave you underinsured. Avoid these 10 costly mistakes while buying your home insurance policy.
Underinsuring Your Home to Save Money
A small monthly premium is great if you have the proper insurance. However, if you sacrifice coverage for a good deal, you might be paying for that mistake in the future. Many new homeowners make the mistake of purchasing the minimum amount of insurance to meet mortgage requirements. This can be a huge mistake when you need to file a claim. The money you save on monthly premiums can be dwarfed by the cost of being underinsured when you file a claim.
Making Assumptions About Home Insurance Coverage
Most home insurance policies don’t include flood coverage. Unfortunately, that’s only one of the assumptions that many homeowners make about a basic home insurance policy. Discuss every aspect of your policy so you’ll understand the coverage you have, and the optional policies you can add to complete your coverage. Homeowners mistakenly assume their home insurance policy covers:
- Sewage backup
Failing to Understand Home Insurance Terms
Understanding the difference between actual cash value and replacement costs can save you thousands of dollars if you have to make a claim. Actual cash value will pay out the amount your possessions are worth at the time you file a claim. This means you won’t be reimbursed for the amount it will cost you to replace these items or even the cost you originally paid. Choosing a policy that covers replacement costs means you’ll have the funds to replace the items you lose.
Assuming You Have a Single Flat Rate Deductible
Your deductible is the amount you have to pay out-of-pocket before your policy will start paying out on a claim. While your policy might include a flat rate deductible, some policies have percentage deductibles for named perils. Before choosing a home insurance policy, ask your independent agent about options with a single flat rate deductible.
Not Knowing Your Risks
Your home may not be located in a high-risk flood zone, but you should still have an understanding of how often floods occur in the area. Weather patterns change and recent years may show your home is at a higher risk for certain damages that may not be covered in a basic policy. Thunderstorms, landslides, and floods all pose a significant threat to your home.
Underestimating the Value of Your Home and Possessions
Guessing the value of your home and possessions could cost you thousands of dollars in the event you need to file a claim. To truly understand the cost of rebuilding your home and replacing your possessions, you’ll have to research the cost of building materials and take a complete inventory of your possessions. Make sure your policy has the coverage you need and your insurance agency has a solid reputation.
Failing to Understand Exclusions
Assuming your policy covers everything is a dangerous mistake. For example, most basic home insurance policies might cover flooding due to a burst water pipe inside your home, but floods from outside are specifically excluded. Be certain to read the fine print on your policy and ask your insurance agent about exclusions.
Neglecting to Bundle Your Policies
Working with an independent insurance agent provides you with opportunities to get a variety of insurance policies in the same place. Besides home insurance, you may have a car insurance policy, coverage for your most valuable possessions, and even protection for your pets. Your independent insurance company can provide you with important discounts when you bundle a variety of policies. Additionally, adding optional policies to your basic home insurance policy will give you the opportunity to customize your coverage to meet your lifestyle.
Choosing the Wrong Insurance Company
Home insurance is designed to be a form of protection in the event you lose your home. Choosing an insurance company because it’s the cheapest or the one around the corner could leave you without the coverage you need. Research local insurance companies, take the time to meet your insurance agent, and ensure you really understand the details of your policy before you make a final choice. You need to know you’re working with a stable company with a history of handling claims honestly. Additionally, your insurance agent should be easy to approach, provide answers to all of your questions, and make sure you’re comfortable with your insurance choices.
Failing to Update Your Home Insurance Coverage
Changes to your home and new possessions mean changes to your insurance policy. Additionally, a growing family could indicate costly possessions that should be included in your policy as well. When you make a significant change to your property or make an expensive purchase, your insurer needs to know. Thus, your insurance will cover any potential losses.
Learn More About Home Insurance
Your home insurance policy is an important investment to provide you with the protection you need in the event of a loss. However, failing to get the proper coverage can leave you underinsured. Avoid making costly mistakes by discussing your unique lifestyle with your independent agent before making a final purchase. If you live in the Greater Boston Area of Massachusetts and are seeking home insurance, get in touch with insurance experts at LoPriore Insurance today. Our team is standing by to answer your questions, provide information about our available policies, or provide a quick quote. Avoid facing mistakes that leave you underinsured with the right home insurance policy to fit your lifestyle.
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To learn more about how homeowners insurance can protect your business, get in touch with the independent agents at LoPriore today. Our experienced insurance agents are available 24/7 to answer your questions, provide information about our home insurance policies, or provide you with an instant quote.