Your home is your INVESTMENT. Between time-in on your mortgage payment, home improvements, and general appreciation, you can use your home as an asset to leverage for your future. If you are bound by a mortgage, you are required to hold homeowner’s insurance to protect your asset from things like weather damage, fire, theft, etc. If you are free of the mortgage debt; it is just as important to protect what YOU own. While it is a huge benefit in times of crisis or emergencies, your homeowner’s insurance may have catches within its terms that might cause financial burdens/hardships on you and your family.
Here are 6 of the most common mistakes people frequently make when purchasing homeowner’s insurance:
Not Examining Deductibles.
Examine your deductibles carefully. Many homeowner’s insurance policies have hidden, variable deductibles buried in the clauses of their policies. While some homeowners may think they have a single, flat rate deductible; that may only be the case for particular types of claims. When you dig deeper into your policy, you may find that claims like your wind/hail deductible, which is the most common homeowner’s claim, is a percentage based deductible, which means it is based on a percentage of what your home is insured for – and most likely higher than your base deductible.
Not Understanding the Types of Roof Coverage.
Roof claims due to hail/wind/storm damage are typically offered with two, totally different approaches – and it is imperative to know the difference.
Actual Cash Value: This approach means that if you have damage to your roof, you will only receive what the roof is worth based on its age. To simplify things: if your roof was eight years old, the adjuster will give you the depreciated price of your roof. So, if you paid $10k for it six years ago, you will only receive a fraction of that $10k back and will be left to foot the rest of the replacement costs for the new roof.
Replacement Cost: When your policy lists the roof coverage as a “total replacement cost”, that means you will actually get the entire cost of the new roof replacement covered minus your deductible. The price difference/increase of this type of policy is very minimal when contrasted to the amount you may have to shell out for a new roof under the actual cash value policy.
Not Understanding Personal Property Coverage.
Much like the methodologies for roof coverage, your personal property coverage needs to be examined closely to determine if it is “Actual Cash Value” or “Replacement Cost” coverage. Keep in mind that in the event that you lose/destroy personal items due to fire, theft, weather or natural disaster related claims, you will need to replace those items. With the severity of loss in these instances, having replacement cost coverage is the only methodology in which you will be able to recuperate all of the items you have lost – and not be shorted in the “actual cash value” type of coverage.
Important add: Make sure that when you have extremely expensive items in your house, such as jewelry, tools and firearms that you file an endorsement with your policy to ensure you will get the full replacement cost. If you choose not to file an endorsement for your expensive diamond ring and it gets stolen, you might only receive a fraction of what you claim it was worth.
Not Securing Sewer Backup Insurance Coverage.
Sometimes insurance providers look at this as an additional endorsement that is attached to your policy. As this claim is very common among homeowner’s, it should be a coverage that requires signing off on if you opt not to receive it – but it can easily be missed when you are going through the homeowner’s insurance procurement process.
Not Considering Your Dog When Securing Your Policy.
If you have a dog that is on the “dangerous dog list” with insurance companies, then you will need coverage in the instance the dog would bite and/or attack a person or another domestic animal. This type of claim can easily get up there in cost due to the expensive nature of medical/veterinary costs – so you do not want to go without this coverage and put yourself at risk of being sued.
Dangerous dog insurance coverage is also not easy to source and secure. (Some insurance providers will not write homeowner’s insurance if the individual/family has a dog on the list.) Beck Curry has niche expertise in this area – so please reach out to us if you need help.
Not Understanding How to Secure Flood Insurance.
Flood insurance, while offered through mainstream insurance providers, is actually secured through The National Flood Insurance Program, which is managed on a federal basis. Flood insurance is a flat rate insurance policy that is determined by studies of your area’s typography and prices are set according to government data. It is not attached or written into your homeowner’s policy; it is a separate policy that will need to be addressed as such.
It’s important to know that just because your homeowner’s insurance is attached to your mortgage; it has no bearing on your freedom to shop it to other providers. Most importantly, waiting until an emergency to become acquainted with the ins-and-outs of your homeowner’s insurance policy is an emergency too-late. Let us help you take a proactive approach to potential emergencies and shop your homeowner’s insurance out to numerous providers who can ensure your coverage is customized to your needs and at a rate you can afford. Email us at email@example.com for a 1 day turnaround on your policy review.