Purchasing a homeowner’s insurance policy seems straightforward, but homeowners commonly make these four mistakes when shopping for policies.
Buying Too Little Insurance
Many homeowners unknowingly purchase policies that don’t cover the cost of rebuilding. As many as two-thirds of American homes are underinsured! This happens when homeowners only buy enough to cover the amount of the mortgage, which may not even be the entire value of the house, or they buy coverage equal to the current value of the home only to find out that the actual cost of rebuilding is much higher.
For a more accurate picture of how much it would cost to rebuild the home, contact a professional home replacement cost estimator, then speak with an agent to adjust the policy accordingly.
Misunderstanding the Deductible
The deductible isn’t always the number that was listed on the policy. Many homeowner’s insurance policies have different deductibles for different situations. Sometimes it may be the $1,000 flat deductible listed on the policy; other times it may be a percentage of the coverage. Major events like earthquakes and hurricanes could set a deductible of 15 percent of coverage or more. Be sure to understand the deductible to avoid unexpected expenses.
Thinking Flood Insurance Is Included
Although many people find out too late, flood insurance is not included in most policies. Anyone living near water should buy flood insurance, but it’s a good idea for every homeowner to purchase it. The price varies based on risk and type of coverage, but it’s worth the extra peace of mind when the next big storm rolls in.
Believing Sewage Backup and Mold Removal Are Included
It’s not unreasonable for people to assume that sewage backup or mold removal would be covered under their homeowner’s insurance policy, but it’s not covered by many carriers. At about $50 yearly, it’s inexpensive to purchase sewage backup insurance, but mold insurance is much more expensive and harder to find. Older homes in humid climates are more likely to experience problems with mold, so these homeowners find it to be a worthwhile expense while others aren’t likely to experience mold problems at all.
Homeowners should contact their insurance carrier with any questions about their homeowner’s insurance policy to avoid unexpected expenses after filing a claim.