Homeowners insurance is one of the most important topics for homeowners. Even if you research and consider all the options, it's easy to overlook some aspects of your coverage.
Whether it's not understanding your policy or having adequate coverage, these home insurance mistakes can be costly. so it's important to prepare yourself financially.
Here are some common home insurance mistakes that could cost you and how you can fix them.
Too little coverage
For the most part, home insurance providers inform you how much coverage you need. Coverage is for the cost of rebuilding your home, not the value of the land.
But suppose you don't have adequate coverage for the price of rebuilding. In that case, you could find yourself in a bad financial situation.
Make sure that you understand the ins and outs of your coverage so that you can determine if you need excess coverage or an umbrella policy to be fully insured.
Not having flood insurance
Standard homeowners insurance policies don't include flood coverage. That means that if a flood occurs, you won't be able to file a claim or receive funds for repairs.
But the good news is that you can work with your insurance provider to determine if you need flood insurance.
If you do, you can get a policy through the government-backed National Flood Insurance Program (NFIP) or a private insurer.
Not looking for the best deal
You may shop around for the best deal on home appliances and clothes already. It's a smart idea to do the same for your homeowners' insurance.
According to the National Association of Insurance Commissioners (NAIC), different companies provide different rates and service levels.
So, just as with any other purchase, finding the best home insurance deal and working with people you enjoy is essential.
Not knowing how to file a claim
If you don't know how to file a claim with your insurance company, figuring out how might be a smart idea. The last thing you want in a natural disaster or other upsetting event is not to know how to start a claim.
Most companies make the process easy. You can usually file claims through the company's mobile app, online, or directly with an insurance agent.
Not getting earthquake coverage
Home insurance policies don't usually include earthquake coverage. But you might want to add it if you live in an area prone to earthquakes.
You definitely want to figure it out before an earthquake occurs since it will be too late to add coverage afterward.
Not knowing your deductible
Your deductible is the amount you have to pay out-of-pocket towards a claim. This is usually a fixed amount, but some types of catastrophic insurance have deductibles that are a percentage of the home's value.
If you're unsure what your deductible is, it's time to find out. It's usually a good idea to have enough savings to cover the deductible in the event you need to file a claim.
Not reading the exclusions in your policy
Insurance policies come with a Special Form that lists all of the perils your policy doesn't cover.
Reading the document and understanding what is and isn't covered is a good idea. Doing so will allow you to have realistic expectations for your policy and give you time to add any extra coverage you want.
Neglecting to set up autopay
With autopay, you can pay your insurance premium monthly without ever lifting a finger. Once you set it up, the money is automatically deducted from your account, and your bill is paid in full.
Autopay ensures you stay caught up on payments and don't accrue late fees. It's a win-win for your finances and insurance policy.
Not asking about windstorm coverage
Whether or not your policy includes windstorm coverage depends on the location of your home and the details of your policy. But if you live in an area with a high likelihood of windstorms or wind damage, the additional policy might help.
Even if you don't have the coverage and decide not to add any, it's still a good idea to know what your policy includes.
Putting off finding coverage
Home insurance is not legally required, but mortgage lenders usually require you to get it.
But if you don't have a mortgage or find yourself in another situation where you have yet to get insured, it's a good idea to make it happen.
Your house is probably your largest financial asset, and protecting it is a good idea.
Home insurance can seem overwhelming, especially when it comes to understanding the details of your policy. But when you take control of your finances, you take control of your life.
Home insurance can help help you keep more money in your wallet with the protection it provides. Avoiding these mistakes can save you a lot of money.
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