Property damage or loss of belongings can be a financially devastating event for homeowners. That is why home insurance is a necessity for individuals who wish to be protected in the event of a disaster. In order to get adequate protection, there are certain common mistakes that you should try to avoid. Here are 10 of the most frequent purchasing errors we see clients make – And suggestions for avoiding them.
Choosing a Policy Based on Price
The cost of home insurance in the RGV is a frequent concern for customers – And rightly so. Affordable policies are essential in making this type of protection available for homeowners. However, one of the biggest mistakes customers make is choosing their policy based solely on which one offers them the lowest price. Selecting the cheapest policy can present a number of problems, including the following:
- Ending up with an insurer who is difficult to work with
- Getting inadequate coverage
- Dealing with a dishonest insurer
The best way to avoid this problem is to deal with an independent insurance company who can work with you to get reasonably-priced policies that also meet your coverage needs. Reputable, highly-regarded companies that put your insurance needs first can help you balance your budget and coverage in a satisfactory way.
Selecting Inadequate Coverage
As with most insurance policies, the less coverage you purchase, the lower your premium will be. As a result, many customers only purchase the coverage required by their mortgage company.
However, while you may save money by buying less coverage, you may end up paying much more in the event of a disaster. For example, say your home is worth $350,000 but you only owe your mortgage company $150,000.
Your mortgage company may only require you to purchase home insurance coverage equal to $150,000 to cover your outstanding balance. However, say a disaster results in a total loss of $200,000. You will be left paying $50,000 out of your own pocket.
You can prevent this problem by working with your insurance agent to get coverage that will protect you in the event of even a total loss.
Misunderstanding Actual Cash Value vs. Replacement Costs
When buying home insurance in McAllen, you will choose between actual cash value and replacement costs for your policy. One mistake some customers make is to choose actual cash value rather than replacement costs.
Actual cash value means that you will receive reimbursement that matches the value of your belongings when you file the claim. This approach means you may not receive enough compensation to cover the cost of replacing items whose purchase price is more than their actual cash value.
In order to avoid this problem, you may want to purchase a policy that provides you with the replacement costs of your belongings. This means that you will receive financial protection that allows you to rebuild your home or replace your possessions without spending as much of your own money out of pocket.
Home insurance rarely includes a single, flat-rate deductible. Instead, you may need to pay different deductibles for different disasters. For example, you may pay a different deductible for replacing your roof after a storm than you do for rebuilding part of your home after a tree falls on it. In order to be prepared for these expenses, make sure you understand your policy’s terms and rates. Your insurance agent can help walk you through your policy to ensure that you understand what you will owe in the event of any disaster.
Failing to Understand Exclusions
One of the most common home insurance mistakes we see customers make is assuming that every disaster is covered by their policy. While this type of policy covers many incidents that can affect your home and belongings, there are often certain exclusions that you should be aware of. Here are some of the situations that are typically not covered by home insurance:
- Poor Maintenance
- Certain items such as jewelry
You should talk to your agent before purchasing a policy to understand the limits of your policy and what will and will not be covered.
Failing to Bundle Policies
Home insurance is rarely the only policy customers purchase. Insurance for vehicles, pets, medical expenses, and more are often part of the policies that they buy in order to protect every area of their life.
One common home insurance mistake that consumers make is to buy these policies separately, often from different insurers. The result is that they end up paying more than if they had bundled their policies with a single insurer.
When purchasing home insurance in the RGV, ask about discounts for bundling policies. You can often enjoy discounts that make all of your policies more affordable.
Neglecting to Update Home Insurance Coverage
Changes are inevitable over time, but sometimes, customers fail to recognize how those changes may impact their home insurance coverage. There are certain life events or changes that you should consider discussing with your insurance agent. Here are some of them:
- Renovating or adding onto your home
- Additions to the family
- Addition or loss of a pet
- Expensive purchases
- Addition of security features
- Starting a business
Thinking Home Insurance Will Cover Their Renters’ Property
Home insurance is intended to cover the policy holder’s belongings and property, and the belongings of those who live with them. What it will not cover is the belongings of renters. In this case, it is best for tenants to purchase their own renters’ insurance to protect their personal possessions.
Failing to Get Multiple Quotes
The first quote you receive on home insurance does not always reflect that policy that will best serve your needs. You may end up with a quote that is too high, coverage that is inadequate, or an insurance company that is not responsive to your needs.
Instead of relying on a single quote, shop around to find several quotes for the coverage you need. Or, use an independent insurance agency like SafeGuard who can help you find, and understand, multiple quotes. Once you have several quotes in hand, you can make a more informed decision regarding the policy that will best work for your needs.
Failing to Complete a Home Inventory
You do not have to inventory your home in order to purchase home insurance. However, not doing so could be a mistake. If you underestimate how much your home and belongings are worth, you may find yourself under insured if disaster strikes.
Instead, take the time to determine the real value of your home. Make a list of your belongings and research their value. You can focus primarily on the items that have value, such as furniture, electronics, clothing, and jewelry.
This list will not only help you get the right amount of coverage, but it will also help you to get the right reimbursement if a covered event ever occurs.
Home insurance mistakes can be expensive. Finding an insurance agent, such as SafeGuard Insurance Agency, to help you through the buying process, can save you money. Let us assist you in getting home insurance that meets your needs, at a price that fits your budget. Contact us today for a free quote.