Buying a home is one of the best investment decisions you can ever make in life. However, it is equally prudent to insure your home adequately against damage, destruction, and theft of your possessions. This is where home insurance comes in handy. According to the Insurance Information Institute, 5% of insured homes had a claim in 2018, with 98% of these claims filed due to property damage. However, home insurance coverage can be tricky. You might make crucial home insurance mistakes, especially if you do not understand the technical aspects related to it. With this in mind, here are three common homeowners’ insurance pitfalls you should avoid when buying homeowners insurance.
Underinsuring Your Home
The Northwest Insurance Council states that about 60% of homes in the U.S. are underinsured by over 20% of their value. This means that over 50% of the homeowners’ insurance policies in America can only cover the mortgage costs, which is usually lower than the value of the house. When purchasing home insurance coverage, ensure it is not only enough to cover the cost of rebuilding your house but also the cost of replacing your possessions. To be on the safe side, have your home appraised regularly, and update your homeowners’ insurance coverage accordingly.
Assuming Your Flat Rate Deductible Won’t Change
A deductible is a specified amount of money that your insurer will require you to pay upfront when you file a homeowners’ insurance claim. Your insurer may change your deductible from a fixed rate to a percentage of your policy value due to certain factors. For example, filing a claim due to a named peril, such as flooding, your deductible might change from a flat rate to a percentage of your home insurance coverage. Keeping this in mind, make sure that you read the insurance contract or ask your insurance agent before committing yourself. The good news is that a higher deductible can help you save on your premium. Remember that one of the most common insurance mistakes is to assume that your deductibles will remain constant.
Assuming You Automatically Qualify for Flood, Mold, and Sewage Coverage
Floodsmart reports that an inch of water can cause damage worth $25,000. However, most standard homeowner policies do not cover weather-related flooding. The best way to protect your property against flooding is to purchase flood insurance. It is worth noting that 25% of all floods occur in low-risk areas, according to the Insurance Information Institute. Besides flooding, you may also have to purchase supplemental insurance for sewage backup and mold. In particular, mold is one of the most common homeowners insurance pitfalls to avoid, especially if your property is prone to mold. Remember, the cost of mold remediation in the U.S. generally amounts to $1,500 to $3,500, as reported by fixr.com, whereas mold insurance costs much less.
When purchasing homeowners’ insurance, avoid these three home insurance pitfalls. For any insurance-related questions, contact the experts at Gant Insurance Agency in McKinney, Texas. We will help you choose the best homeowners insurance policy for your needs.