Homeowner’s insurance is property insurance that covers your home in the event it is damaged (inside or out). It also covers your guests should they become injured while on your property. If you carry a mortgage on your home, homeowner’s insurance is almost always a requirement.
Whether you’re a first-time homebuyer or a long-time homeowner, getting homeowner’s insurance can be confusing. Not choosing the right policy can cost you dearly should something happen on or to your property. To help ensure you get the right kind and amount of insurance you need, try to avoid making the following mistakes.
1. Not Adding Insurance that Your Policy Excludes
Nearly all homeowner’s insurance policies include exclusions. Exclusions are things your policy won’t cover such as earthquake or flood damage if you’re not located near a fault line or in a coastal area. Keep in mind that even if your home isn’t situated near these things, damage can still occur in and to your home from these natural disasters.
Mold growth and sewage backup are common problems that usually aren’t covered by the typical homeowner’s insurance policy. While you may be tempted to forgo any additional insurance to cover damages from flooding, earthquakes, mold, and sewage to save some money, it could end up costing you a lot more if something happens and you don’t have this extra coverage.
2. Not Getting Enough Coverage
One of the biggest mistakes homeowners make is only obtaining enough insurance to cover their mortgage. They forget to factor in the cost of rebuilding a home or replacing valuables inside should natural disaster or theft result in loss.
If you are unsure how much insurance you need to cover it all, ask your agent for the average rebuilding costs in your area. This is usually factored by the square foot, and the number should be close to what your homeowner’s insurance policy covers. To further figure out the amount of coverage you need, make an inventory of your valuables, with receipts and photos, to add contents coverage to your policy.
3. Setting the Wrong Deductible
There is a fine line between paying a deductible that’s too high or one that’s too low. Choose a high deductible and you could end up paying most or all of a claim. Choose a low deductible and you could end up paying outrageous premiums for your policy.
If you aren’t sure how much your deductible should be, talk with an expert who can help you make the right decision.
Homeowner’s insurance is as confusing as it is necessary. Whether you’re getting insurance for the first time or you’re switching or updating your current policy, be sure to avoid making the mistakes listed above to ensure you get the right type and amount of insurance for your home.