Homeowners’ insurance is not the first thing on the mind of most people when they buy a home. It should be. Why should you pay more if you can get a better deal? Here are the five most common mistakes that people make when they buy homeowners’ insurance.
1. Taking the first quote that comes
Buying-in to the first quote that comes to you is probably the biggest sin in homeowners’ insurance. Premiums vary between insurers and looking at a number of quotes can actually save a bit of money. This is also true if you are renewing your policy.
2. Getting the wrong dwelling coverage
Dwelling coverage is the money that you will get if your house is damaged by any event covered by the policy. Ideally, the coverage should be big enough to rebuild the house from scratch. Your insurance agent can help you calculate the right dwelling coverage.
3. Not insuring high value possessions
A standard homeowners’ policy covers personal possessions but the coverage is usually not full. At the most, it may be 50-70% of the total value of these possessions. But here too there is a catch. Some high value possessions like artwork, jewelery and furs have sub limits. See your homeowners’ policy carefully. If you see such sub-limits, buy an endorsement and ensure that the items are fully covered.
4. The deductible is too high (or too low)
The deductible is like a co-pay in your policy. In case there is a mishap and your home suffers some damage, you will have to pay the deductible out of your own pocket and then the insurance company will pay the balance. As the deductible goes higher, the premium goes lower. But there is a problem here.
If you cannot come up with the deductible when your house suffers damage, your insurance policy will not kick in. But if the deductible is too low, you will have to pay a higher premium. So the trick is to arrive at a sustainable deductible. Discuss this with your insurance agent before you buy a policy.
5. Providing incomplete information
The insurance agent will ask you a number of questions before he or she signs you up for a policy. Don’t mistake this for intrusiveness. The agent needs this information to understand your risk.
Generally, the lower your risk, the lower the premiums. So many people are tempted to lie to their agent. Never do this because it could end up voiding your policy if a mishaps actually happens. Some of the questions will also help the agent determine if you qualify for a discount. So if you lie on such questions, you will end up missing some discounts.
To learn more about getting the best homeowners’ insurance policy, please contact Anderson & Associates, Manatee County’s premium homeowners’ insurance agents.
