Home insurance can seem straightforward at first, but there is a lot of information about home insurance policies that get overlooked. This leads to homeowners having the wrong type of policy or not enough home insurance coverage when an incident occurs.
Here are some common home insurance mistakes and what you can do to avoid them.
1. Not Buying Enough Home Insurance
Underinsuring a home is an unfortunately common mistake among homeowners. While less coverage can save you money on monthly premiums, it can also leave you open to expensive repairs out of pocket. As a rule, you should purchase at least 80% of your home’s total replacement cost value in home insurance. If you have less than 80% of your home’s total replacement cost value, you may have a gap in coverage when it comes time to file a claim.
2. Forgoing Extra Coverage
Basic isn’t always best when it comes to insuring your home. A basic home insurance plan generally covers your physical home against fire, theft, vandalism, lightning, hail, etc., but it also has certain exclusions. Most home insurance policies don’t cover damages caused by flooding or earthquakes. If you live in an area where these natural disasters are frequent, going without additional coverage can cause you heavy financial repercussions in the future.
3. Wrong Deductible Decisions
A home insurance deductible is how much you promise to pay out of pocket when you must file a claim on your policy. Setting this too high can leave you without a way to pay your deductible, while letting it too low can raise your monthly premiums. Carefully weigh your budget with the cost of your home insurance deductible to choose the price that is most doable for you.
4. Not Knowing About Mold Exclusions
Along with exclusions such as flood and earthquake damage, home insurance policies generally don’t cover mold or sewer incidents, either. Mold is typically not covered because it is seen as negligence on the homeowner’s behalf. Homeowners should be careful to clear up any wet areas of the home after a storm and take preventive measures to avoid bad mold damage. Some insurers offer additional insurance for sewer and water damage, so be sure to ask your insurance agent about all of the possible options in case you need additional insurance.
5. Thinking Pets are Covered Under Liability
Most common pets are covered under a home insurance policy’s general liability in case they cause bodily injury or property damage to someone else. Not all pets are covered, however. Certain types of exotic animals will not be covered under home insurance. Many insurers also have restrictions on dog breeds, such as limited or no coverage for pit bulls, huskies, German Shepherds, etc. Ask your insurance agent about possible restrictions if you are worried that your pet may not be covered.
6. Not Updating Your Insurance Provider About Life Changes
When life is changing, it can slip your mind to let your insurance provider know. There is some information that your insurer must know, however. If you make any updates to the home, such as safety improvements or upgrading the roof, you need to notify your insurer. Not only because it may change how much insurance you need on the home, but certain changes can even save you on home insurance premiums.
The same applies if you get a new dog, someone moves in or someone moves out.
7. Waiting Too Long to Make Changes or File a Claim
Most policies have a certain time limit after an incident in which you must file a claim. Depending on your insurer and policy, this could be between 30 and 60 days. If you wait too long to file a claim, the claim could be denied by the time you approach your insurer.
Home insurance also won’t cover negligence. If you know there are shingles missing in your roof or there is a leak in your home but don’t fix it, any damage caused by these weaknesses will not be covered, as the damage could have been prevented.
8. Taking Improper Inventory
Another part of your home insurance policy is personal possessions coverage. If you don’t properly take inventory of your personal possessions and their value, you could be missing coverage when it comes time to file a claim. Be sure to calculate the value of all belongings you want covered. There are also limits on certain objects that may need additional policy floaters, such as jewelry, art and furs.