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Mistakes to Avoid While Buying a Home Insurance Policy

Homeowners insurance policy
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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 costly mistakes while buying your home insurance policy.

Not Shopping Around

Simply going with the first quote you get without comparing different providers and policies can lead to overpaying or under-coverage.

Overlooking Discounts

Not inquiring about discounts for home security systems, bundling with auto insurance, or being a long-term customer can mean missing out on potential savings.

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.

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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:

  • Flood
  • Earthquake
  • Mold
  • 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 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.

Assuming All Personal Property is Covered

Failing to realize that high-value items like jewelry, art, or electronics might have coverage limits and may require additional riders or endorsements.

Skipping Over the Fine Print – Failing to Understand Exclusions

Assuming your policy covers everything is a dangerous mistake. Not thoroughly reading and understanding the policy’s exclusions and conditions can lead to nasty surprises when trying to make a claim. 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.

Not Reporting Changes

Not informing the insurance company about significant changes, such as renovations or the addition of a home security system, which can impact coverage and rates.

Neglecting to Review and Update Your Home Insurance Coverage

Failing to regularly review and adjust your policy to account for home improvements, new purchases, or increased rebuilding costs can leave you underinsured. 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.

Ignoring Customer Reviews and Ratings

Focusing only on price and not considering the insurer’s claim response, customer service, and overall reputation can lead to headaches down the road.

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10 Mistakes to Avoid While Buying a Home Insurance Policy
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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