A home is the largest asset that most people have, whether it’s owned outright or carries a mortgage. Selecting the right coverage for the best price is every homeowner’s goal, but the process can be tricky. There are 5 common mistakes people make when purchasing homeowners insurance, but they can be avoided.
Many people purchase enough coverage to satisfy their mortgage company or to match its current real estate value, but this doesn’t address several issues, including:
In the event that your home is completely destroyed by a fire, flood or other disaster, you may also face a significant financial loss unless you have the right coverage.
An insurance policy is complicated and few people read every line to truly understand what is and isn’t covered. As a result, homeowners assume that an issue is covered by their insurance and are surprised when their claim is denied or they don’t realize that their policy covers a specific situation, so they neglect to file a claim. Ask your insurance agent for a summary of the coverage in clear detail so you understand exactly where you stand. This process also allows you to increase coverage to address needs you believe are likely to arise.
Deductibles are tricky. Many people want to set high deductibles to keep their monthly insurance payments low, but then don’t have the money to pay the deductibles when a problem occurs. A low deductible means lower out-of-pocket costs when there is damage to the home, but the monthly premiums are higher. The question becomes, how do you strike the right balance? Most experts recommend a homeowners insurance deduction of between $500 and $1,000 and you may want to have an emergency fund so you can pay this amount if needed.
You don’t need to live in California to experience an earthquake and you don’t need to live near water to experience a flood. Before rejecting various natural disaster insurance options, such as earthquake and flood, discuss the issue with your agent to learn what types of disasters are possible in your area and then decide which coverage will best protect your home.
Homeowner insurance policies not only list what is covered, but also identify specific events that are excluded from coverage. For example, the policy may cover floods that occur from inside of the home, such as a burst pipe, but not one that occurs from outside the home. Damage is often not covered from common exclusions including:
Depending on where you live these coverages may not be necessary, but you should discuss this with your insurance company before making a decision. You may be surprised by what coverage riders you may need to adequately protect your home and your wallet.
At Alliance, we work with Florida homeowners to find the best coverage at the most affordable prices. Whether you own a house, condo or townhouse, are near the water or in the center of the state, we understand your needs. Contact us today to receive an online quote or call us for more information.
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