When it comes to purchasing home insurance, you want to make sure that your policy fully protects you against the risks to your home that you are most likely to encounter. As you shop around for the policy that will best suit your needs, avoid these common pitfalls.
Mistake #1: Not Properly Valuing Your Personal Belongings
Most people have accumulated their personal belongings over several years. Your personal belongings may be items that you directly purchased as well as items that were gifted to you.
Because personal items are often collected over time and paid for in various ways, it is easy not to value your personal belongings properly. Many people undervalue their personal belongings, which, in the event of a loss, means you will not be paid enough money to replace your personal belongings.
That is why you should complete a detailed home inventory so you can figure out what your personal belonging limit really should be. You can also use your home inventory to identify high-value items that need their own special coverage.
Mistake #2: Choosing a Deductible That Is Too Large
One of the factors that can have the biggest impact on your premium is the deductible amount. As a rule of thumb, a higher deductible will lead to a lower premium. However, it is important not to push your deductible to an amount that you can't pay. Your deductible should be an amount that you could pay tomorrow if you had to make a claim on your homeowner's insurance policy. Evaluate your savings to determine what you can afford to pay right now and adjust your deductible to your amount. If you increase your savings, you can increase your deductible later.
Mistake #3: Misunderstanding Water Damage Coverage
Finally, many people misunderstand what type of water damage is covered by their insurance policy. Most standard insurance policies for homes are designed to cover water damage from things like a malfunctioning appliance or a burst pipe. They are also designed to cover water from external sources, like a sump pump failing.
Most standard homeowner plans do not cover floods. If you live somewhere where floods are a possibility, you will need to purchase an individual flood insurance policy.
With your homeowner's insurance, you are going to want to get your coverage right. Do a detailed inventory of your home's belongings so you can ensure your personal belonging protection is high enough. Choose a deductible you can afford to pay today. Be sure you understand what type of water damage is covered and what isn't by your policy.Share