Home insurance is a necessity, but that does not mean that all insurance policies are the same or that there is no work that needs to be done by you to ensure that the insurance remains valid. Here are some ways to avoid the most common mistakes that people make when it comes to their home insurance.
Going for the lowest price
While we all like to save a little money now and then, home insurance may not be the thing you want to skimp on. While there are upfront savings, in the long run, it could cost you tens of thousands of dollars in expenses that the insurance company simply will not cover.
Not getting enough insurance
As a cost-saving measure, many people buy insurance that covers less than the cost to repair or replace when it is damaged. While it may be a little more expensive to get complete coverage for the value of your home, it is an excellent long-term investment that will preserve one of your most significant long-term investments – your home.
Not getting additional insurance
There are some things, such as floods, that simply are not covered. However, in many cases, you can pay extra to get an additional policy that covers a specific risk such as flooding.
Underestimating the value of your home
Sometimes people do not get enough insurance, not because they are trying to cut costs, but because they do not know the real value of their home and its contents. Make sure to get a good appraisal before moving forward with home insurance.
Not knowing your risks
Are you in an area that is more prone to floods? Knowing what your risks are can help you to seek out the type of insurance that will cover the dangers and damages that your home is most likely to go through.
Skipping on the research
Just picking the first policy that comes along may also not be a good idea, even if the price seems like it will provide more robust coverage. See what it actually covers – and what it doesn’t cover – and make sure of what you are getting into. You will want insurance that will cover you for everything.
Assuming your “all-risk” insurance is actually “all-risk”
The majority of home insurance does not protect you in the event of sewer backups, floods, earthquakes, wildfires, and mudslides. This includes “all-risk” insurance. If they do cover it, there are often limitations and deductibles. Check to see what is actually covered.
Not considering the deductibles
Higher deductibles are usually the result of a lower premium. Check to make sure that any deductibles are reasonable and something you will be able to manage during a crisis. It may make more sense to pay a higher premium instead.
Not reading the fine print
Check the exclusions carefully. While you may have flood insurance, that does not mean that it will cover every type of flood. Take the time necessary to understand what your insurance will actually cover. Don’t just blindly trust that it will include everything that it says it does.
Assuming you have enough liability insurance
If a tree on your property falls over and damages the neighbor’s home or car, your liability insurance may leave you paying for the bulk of the costs. Make sure that there is enough liability coverage within your insurance policy.
Not talking to your insurer
If you make changes to your home, such as turning the garage into a game room, it is always a good idea to speak to your insurer and let them know. In some cases, it may invalidate parts of your policy, which is something you will want to know before you get out the hammer. In other cases, you may want the new thing insured as well, especially if its an addition to your home that you will want to be replaced if something goes wrong.
Missing out on discounts
There are a number of discounts available for doing things that will protect your home, such as installing fire alarms, shutters, a security system, or dead-bolts for the doors; or for insuring your vehicle or other property with the same insurance company.
Not taking pictures
Take pictures of your home and valuables. It will help with appraisals as well as when things need to be replaced due to damage. If you make a new purchase while already under a policy, do not forget to update your insurance provider and take pictures of that too. Do not assume that something is covered just because it is in – or a part of – your home.
Not counting everything
When it comes to contents insurance, it really is essential to count everything and not to under-value your belongings. It may be a tedious process and one that is easy to skip out on parts of, but it will ensure that everything is covered and thus that everything can be replaced.
Assuming you’ll be reimbursed enough to make everything new again
If you paid a good amount of money for your refrigerator eight years ago, do not expect to be reimbursed with that amount if it gets damaged. Depreciation is considered, and the chances are you will receive enough money to buy a similar used refrigerator of a similar age. In other words, it won’t really cover the purchase of something new and of equal value unless you just bought it last week.
Filing a home insurance claim every time there is damage
While it makes sense to take advantage of something you have been paying for, especially if there are damages that it will cover, think before you reach out to your insurance provider. Even if it’s just for something small, every time, you make a claim you increase the risk of insuring you. This will make it harder and more expensive for you to get new coverage later on. So, if you only need small repairs done, consider doing them yourself or paying out of pocket. Keep your insurance for a significant event when it is really needed.