Shopping for homeowner’s insurance can be a confusing process, so it’s only natural that many people rush through it without paying much attention to what they’re signing up for. Even if you made a few hasty decisions when buying homeowners insurance, it’s not too late to revisit your policy and educate yourself on your coverage. Learning from these common mistakes and adjusting your policy as needed could make all the difference should disaster ever strike.
- Confusing replacement cost with value
Because the value of your home is susceptible to fluctuating property values and the cost of rebuilding your home is susceptible to fluctuating construction prices, you can’t assume that insuring your home for its current value will keep you covered–especially if you’ve upgraded your home in any way.
Shoot for a policy that covers the replacement cost of your home, not just the value of your home.
- Not taking an inventory of personal items
Most standard policies also cover the personal possessions inside your home. But the amount you receive from your insurance company to replace these possessions in case of an accident largely depends on your thoroughness in taking an inventory of them.
Take an inventory of all your valuable personal items, such as electronics, appliances, jewelry, expensive apparel, collectibles, and artwork. Take pictures of all these items and collect any relevant receipts or appraisals. It could mean the difference between using your homeowner’s insurance policy to its full potential and paying to replace your valuables out of pocket.
- Overestimating or underestimating the extent of coverage
You may think you’re covered for damage caused by certain kinds of natural disasters, but have you read the fine print? Often you’ll need extra coverage for damage caused by earthquakes, flooding, and wildfires.
On the flip side, some people underutilize their insurance policy by not filing for certain types of loss. Plenty of policies cover certain types of property loss even when it doesn’t occur on your property.
Both of these scenarios can be remedied by asking your insurance agent to break down the specifics of your policy for you.
- Setting deductibles too high
It’s nice to have low monthly premiums, but what about when the time comes to file a claim and you’re stuck with a painfully high deductible?
The deductible is the amount you have to pay before your coverage kicks in. Opt for a higher premium and lower deductible to stay on the safe side; otherwise it’s a good idea to keep an emergency fund just in case.
- Choosing a provider based on price
Just as with anything else in life, when it comes to shopping for homeowner’s insurance, you get what you pay for. It’s not wise to choose the cheapest coverage on the market. It’s cheap for a reason–it won’t keep you covered when you need it most. But it’s not too late for an upgrade.
When buying homeowner’s insurance, look for an insurance company that’s been around for a while and that has a positive A.M. Best Company rating. Take your time researching several providers and see what others are saying about them online. With a bit of due diligence and a phone call or two, you’re sure to find the perfect fit.