When a person purchases a home, it is important that home insurance is purchased in order to protect this significant investment. Many people fall into some common mistakes when purchasing home insurance, and these mistakes can have some serious consequences. Avoiding common home insurance mistakes will provide peace of mind and keep one’s investment properly secure.
Not Enough Coverage
When a person purchases a home insurance policy, the premium will be based on the amount of coverage for the home. In order to keep the premium down, some will carry an amount of home insurance that is not adequate to replace the home and its contents in the case of a total loss. A person should always purchase a policy that will allow for rebuilding the home and replacing the valuable items in the home. A policy should also contain adequate coverage for cleanup of home damage and enough coverage to pay for permits for new construction after a loss.
A Deductible That is Too High
This mistake is similar to mistake number one. In order to keep premiums low, some will get a high deductible on the home insurance policy. As a general rule, the higher the deductible, the lower the premium. However, many do not take into consideration that if a loss occurs, they will have to pay out of pocket the deductible amount. If a person has a $5,000 deductible, that person is responsible for any damage up to that amount. If a person doesn’t have that kind of money to lay out on repairs, a lower deductible should certainly be considered.
Not Understanding the Policy Coverages
Many people are shocked when they make a claim on their home insurance only to find that the damage is not covered. If people would read the policy thoroughly, they would easily be able to see what is covered and what is not covered by the home insurance policy. Always read the policy thoroughly. If an item or a cause of loss is excluded from a policy, additional coverage may need to be purchased.
Getting Too Good of a Deal
You get what you pay for is a familiar saying. That saying almost always holds true in the insurance business. If you come across a company that offers really cheap insurance, you might want to think long and hard about it. Some companies have better reputations than others.