Homeowners Insurance Mistakes to Avoid

13 Nov
Avoid Homeowners Insurance Mistakes

Top tips on saving you the most money while avoiding popular homeowners insurance mistakes.

While saving money is has become a big priority for most people these days, cutting back too much can be an expensive mistake, especially when it comes to home insurance.
Shopping your insurance coverage around in order to find a better deal is always a good idea but cutting back or eliminating coverage altogether can leave you completely unprotected in the event of a serious storm or epic disaster. If your house is destroyed and you are uninsured or are not carrying the proper amount of coverage, the repair and rebuilding costs can be financially devastating.
According to experts, many homeowners have made the mistake of adjusting or dropping coverage in order to trim their budget during the touch economic times we have experienced in the last few years. While this can put a few dollars in your pocket now, it can be a very regrettable decision if the unthinkable happens.
Here are a few tips on how to avoid some of the top mistakes that homeowners make when it comes to insuring their house:

Insuring the house for its real estate value

It’s a common mistake to insure your home for its market value instead of the cost to rebuild it. As prices have declined during the recession some homeowners have cut the amount of their home insurance coverage to save money on their premiums.
While a decline in coverage can save money on your premium, it can leave you short on funds to rebuild your house and replace all of your belongings in the event of a catastrophic disaster. Experts recommend raising your deductible instead of cutting coverage amounts. Raising your deductible from $500 to $1,000 can shave 10-20 percent off of your premium.

On the other hand, it is wise to raise your coverage amounts if you make significant changes or additions to your home such as finishing a basement or completing an attic.

Not getting the proper coverages

A typical homeowners policy does not offer flood or earthquake coverage which means that you will be left holding the bag if your house ends up flooded. If you live in an area that has ever flooded, even if it was decades ago, you should consider a separate flood policy.
The same can be said of earthquake coverage. Even a minor earthquake can cause structural damage to a home, quickly sending repair bills into the thousands of dollars. Check your policy and talk to your agent about what your policy currently covers and if an additional natural disaster policy would be best.

Dumping flood insurance

Dropping flood coverage is always tempting, especially if you live in a low risk area that has not seen a flood in decades. This is one of the biggest mistakes people make when it comes to homeowners insurance. According to industry experts, 25 percent of all flood losses happen in low risk areas.
It only takes one bad storm to destroy your home and ruin you financially. This can be especially important in winters with a heavy snowfall. If you have recently dumped your flood insurance, now may be a good time to reconsider.

Going with the cheapest price

A low priced policy may not be the best deal in the long run. A more affordable premium looks great when its time to write your renewal check but it might not look so great when it comes time to make a claim.
Cut-rate policies may not offer the same coverage as a more traditional policy and the service you receive when making a claim can be downright frustrating. When shopping for homeowners insurance make sure you compare apples to apples when it comes to coverage levels as well as deductibles.
Look for policies that offer replacement value coverage and not actual cash value (ACV). An ACV policy will only pay out the value of the item at the time of the claim so if your roof is damaged the payout amount would be the value of the roof at the time of the storm. This is often not enough to replace your roof.
Choose a company that has a solid reputation and is strong financially. Look for companies that also get excellent customer service ratings.
Saving money is always tempting but before you cut your homeowners coverage, carefully consider the ramifications and make sure your new policy offers the protection you need.

Start on a homeowners insurance quote today and get excellent customer service from a very highly rated company in your area.

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