Avoid Home Insurance Mistakes
If you're looking to purchase homeowners insurance, you probably already recognize the importance of protecting your home and making sure that you won't have to pay out of pocket for significant repairs or losses. What you may not realize, however, is that although many policies seem similar, they may not be equal when it comes to making a claim. Similarly, home insurance laws vary from state to state, so if you're planning on moving to a new state, you'll need to check out the rules and requirements for home insurance in your new state.
Here are 7 mistakes that are commonly made when purchasing homeowners insurance. Familiarizing yourself with them now will help you save money and avoid headaches when making a claim in the future.
- Under-insuring your valuables. Most standard homeowners insurance policies limit coverage on the home's valuables such as jewelry, collectibles or silverware. If you have identifiable valuables such as an art collection, expensive electronics or antiques, you should definitely purchase extra coverage that will cover the entire replacement value of these items. You may save money in the short run by forgoing this coverage but if anything happens to your valuables you'll end up losing significantly more.
- Forgetting to insure your workers. If you have live-in help or regularly hire workers such as landscapers or nannies, you may need to insure these workers separately, in case they are injured while working on your property. Although this type of coverage may seem frivolous, some states actually require that you pay into a worker's compensation fund. Check with your insurance agent whether you're required to do so, or whether your standard policy will cover all accidents that occur on your property.
- Placing too much emphasis on cost. There's no question that cost is important when purchasing homeowners insurance, but it shouldn't be the determining factor. Make sure to compare policies that offer the same benefits and coverage so that you'll know you're getting the best service for your investment – policies that have attractive pricing often scrimp on the coverage and can cause you to incur greater expenses later on.
- Failure to review (and update) your policy regularly. The cost of your homeowners insurance can change based upon multiple factors including fluctuating housing and construction prices, recent construction on your home or having several years without making a claim. You should evaluate your needs on a yearly basis to determine if you need to increase your coverage or if you can request a deduction in your policy's monthly cost.
- Not insuring home-based businesses. Many small or home-based business owners don't realize that their home-based business is not usually covered by their home insurance policy, which means that in the event of an emergency or disaster most office equipment won't be covered. Make sure to add your home office to your home insurance policy or to take out a second policy that will cover these losses, should they occur.