When shopping for homeowners insurance coverage, it is easy to make buying mistakes, especially when one bases their decisions on assumptions rather than on concrete facts. Many consider home insurance an unavoidable necessity imposed by their banks, rendering little or no attention to its adequacy or underlying conditions. Thus, they make ignorant choices and are shocked to find themselves under or even uninsured against certain perils.
To avoid such unpleasant last moment surprises, here are the three most common mistakes you must avoid while buying homeowners insurance.
Mistake #1 – Assuming a Standard Homeowners Policy Also Covers Mold, Flood, and Sewage Backup Damage
Typically, a standard homeowners insurance policy does not cover damage resulting from mold, sewage, and weather-related water damage. For example, suppose your home is located within a designated flood zone. In that case, your mortgage lender will most likely require you to purchase an additional home insurance policy called a flood insurance policy. The same is true if your property is near a large water body such as an ocean, canal, river, or lake.
Take note that even if your mortgage lender does not require you to have flood insurance, you should carry it if your property is located near any of the aforementioned water bodies. Besides flood insurance, you should also purchase mold insurance and sewage backup coverage, which is usually relatively inexpensive, with annual premiums starting from as low as $50.
Mistake # 2 – Assuming Your Deductible is a Fixed Amount
A deductible is one of the main features of a standard homeowners insurance policy. It is a specified amount of money that you will have to pay upfront when you file a homeowners insurance claim. It is worth noting that your deductible determines your annual premiums. More specifically, a higher deductible means lower annual premiums and vice versa. Besides your deductible, your credit score will also determine the cost of your homeowners insurance coverage.
Similar to a deductible, a higher credit rating means lower annual premiums and vice versa. For this reason, you should make it a habit of going through your credit report regularly to ensure it is accurate. If you file a homeowners claim, your insurer could change your deductible from a fixed amount to a percentage of your home insurance policy. This percentage could be as high as 15%, so make sure to go through the fine print carefully to avoid unpleasant surprises.
Mistake # 3 – Not Leveraging Discounts Programs
To entice and retain policyholders, many home insurance companies offer a variety of discount programs. In most cases, such programs apply to a wide range of things including, among others:
• Using safe building materials
• Installing a home security system and features such as deadbolt locks and surveillance system
• Installing home safety system such as fire alarms
• Purchasing different policies from the same carrier
If you have done any of these things, make sure to take advantage of the relevant discount program.
While planning to buy a new home, pay careful attention to all the details mentioned in your homeowners insurance policy. If you have been living in the same house for a while, it is high time to review your current coverage against more feasible options. In either case, knowing your unique needs and evaluating your coverage options will help you avoid these common mistakes while buying homeowners insurance.
If you want to learn more about home insurance policy, contact the experts at First Insurance Solutions. We will assist you with all your coverage needs.