Avoid these homeowners insurance mistakes
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Homeowners insurance may not be the most exciting part of buying a home, but it’s one of the most important. Buying a home is probably your biggest investment, so use every tool to make sure that you’re covered. Homeowners insurance calculators are powerful tools toward that end, but they aren’t always tailored to you.
What You Need to Know About Homeowners Insurance
Basic homeowners insurance only covers damage caused by “fire, theft and certain natural disasters,” meaning you may have to purchase additional coverage depending on where you live and what materials were used to construct your house. For example, you may want to consider a home warranty to cover repairs and replacements that home insurance won’t cover.
According to Forbes, there are 4 Costly Homeowner’s Insurance Mistakes to Avoid:
- Under-insuring your house. Without enough insurance to cover the cost of rebuilding your house if destroyed, you may be left in a financial crisis following a disaster. You should calculate the cost of rebuilding your house and make sure your protection matches that cost. Additionally, you might consider coverage for your valuables.
- Assuming you have flood insurance. Depending on where you live, flood coverage could be essential. Many homeowners are unaware that basic coverage does not include flood insurance, but for those living in coastal or other flood-prone areas, that extra coverage is critical.
- Thinking you have one, flat deductible. It’s common to assume that your policy has a set deductible (usually between $500-$1,000), but that’s not necessarily true. Depending on the cause of damage — hurricane, windstorm, earthquake, and so on — your deductible could increase dramatically if your insurance has different deductibles. You might be able to switch to a policy with a flat-rate deductible, depending on your insurance provider; if not, you’ll need to maintain an emergency savings fund just in case.
- Believing you’re covered for mold or sewage backup. This is another kind of coverage that many basic policies don’t provide. Additional insurance for mold can run at a high price, so it’s important for you to evaluate the humidity levels where you live and find out if your home was built without mold-resistant materials (a common problem in older houses).
*Investment and Insurance Products are NOT Bank Deposits, NOT FDIC-Insured, HAVE NO Bank Guarantee, NOT Insured by any Federal Government Agency, May Go Down in Value.
