Buying a home is a large investment, so it’s important to protect your home. Home insurance protects homeowners against financial loss in the case of damage or destruction. Things like natural disasters, theft, and other unforeseen events can cause serious damage resulting in financial losses. Protecting your home with insurance can protect your home and belongings. Below you will find the top home insurance mistakes to avoid.
Top Home Insurance Mistakes to Avoid
Home insurance is necessary if you own a home, as more than 80% of homeowners purchase coverage. This can help you feel secure even if an unexpected event occurs. It’s important to choose the right policy for your home, so consider the following home insurance mistakes to avoid.
Assuming Certain Coverage:
Assuming that your home insurance policy covers everything can be a mistake. In fact, many people assume floods are covered by their home insurance policy. While this coverage can be added, it is not covered in a typical home insurance policy. Most policies cover things like a burst pipe. However, it is rare that it would cover water coming into your home from an external source like a storm or hurricane.
Failing to Compare:
Every insurer is different, so it’s important to compare prices. One of the key issues affecting homeowners is being underinsured. In fact, more than half of homeowners are underinsured. This can be a huge problem, so it’s important to compare the type of coverage and their related prices to ensure you are getting the most coverage at a reasonable cost.
Not Considering Market Value vs Replacement Value:
A common mistake homeowners make is confusing their home’s fair market value with its replacement value. Your home’s market value is how much someone would pay to buy it. On the other hand, the replacement value is how much it will cost to rebuild your home. Consulting with a skilled insurance company and brokers can help you determine the proper value for your home.
High Deductible Plan:
Be sure to compare high and low deductible plans before you commit. A high deductible plan will save you money on your premiums, but it also increases your responsibility in the event that you make a claim. This can be a lot of money to come up with at once, so it’s important to do the math and save accordingly if you move forward with a high-deductible plan.
Passing On Sewer Backup Coverage:
You never know what can happen, so avoid skipping out on sewer backup coverage. Typical home insurance policies do not cover losses caused by a sewer backup. However, you can add it to your policy so you can have peace of mind in the event that your home experiences sewer issues.
Choosing Minimum Liability Coverage:
Minimum liability coverage can be dangerous for some homeowners as it only covers around $100,000. This may be enough for some homeowners, but it’s important to be sure it is before you stick with minimum liability coverage. Many people are concerned about the cost of their policy, but increasing your liability covered isn’t that much extra in the long run.
Not Reporting Major Changes:
Notifying your insurer of major changes is necessary and can be a big mistake if you don’t. Changes like getting married, remodeling your kitchen, adding rooms, or even getting certain animals can impact your coverage. It’s better to report changes right away to avoid potential coverage issues.
Misunderstanding What’s Covered:
Some homeowners make the mistake of thinking maintenance issues will be covered by their insurance. This is not the case, as you are responsible for maintaining your own home. Avoiding regular maintenance can result in additional issues if you claim damage. If the damage is caused by your inability to maintain your home, your claim can get denied.