Fire, floods, wind, heavy rain, and even a tree limb can all wreak havoc on your home and belongings. In most cases, you will not have the financial means to make repairs or replace lost belongings, which is why homeowner's insurance is so important. Unfortunately, you may not realize you are making a few costly mistakes with your homeowner's coverage. Here are a few common mistakes homeowners make when securing homeowner's insurance.
Making the Cost a Priority
Yes, homeowner's insurance will be an expense, which you will pay out of pocket throughout the year or add to your monthly mortgage payment. Because it is an expense, you may want the most affordable coverage possible. However, this affordable coverage could mean you have inadequate protection.
It is fine to shop around with different insurance carriers, but if you are considering a quote that is much lower than another carrier, pay attention to the coverage amounts/limits and fine print.
Assuming It's All Covered
Another mistake many homeowners make is assuming everything is covered under their insurance policy. In reality, there are many instances where the insurance company will NOT pay for repairs or lost belongings, so it is important to know what is included and what is excluded.
For example, many homeowners assume they have flood coverage. In reality, flood insurance is usually not added unless your mortgage company states it is necessary. If you live in a flood zone or a flood-prone area, you will most likely be required to have this coverage.
Mold and sewage/septic problems are usually not covered either. Therefore, if you have developed a mold problem or your sewage system or septic tank has backed up, you will be responsible for paying for this damage. Some insurance carriers do offer this protection, though. While an extra fee, the additional coverage can be a smart investment.
Finally, you need to spend time documenting your belongings and their value. Many homeowners have no idea how valuable certain items are until they are lost.
Consider having jewelry, collectibles, coins, art, and other items appraised. Make a list of all of your belongings, especially the more valuable ones, and place it with appraisals in a safe location, such as a fireproof and waterproof safe. It is also helpful to take photos of your belongings.
The combination of appraisals and photos will be useful when filing claims with the insurance company.