Taking homeowners insurance is an important step towards protecting your home in case there is a disaster such as fire, vandalism or theft. However, the insurers should avoid some mistakes in order to reap the full benefits of insuring their homes. Some of those mistakes include:
Under insuring
One of the biggest mistakes that homeowners make is to under insure their homes. They fail to make enough coverage for rebuilding their homes. For an insurer to rebuild your home in case there is a disaster, you need to have provided the full coverage of rebuilding. That is why you should know how much it would cost to rebuild your home so you can insure accordingly. Most homeowners only insure the home at the value of the mortgage or at the current value, which can be much less than the value of rebuilding. When the disaster strikes is when you realize that the amount that the insurer gives you is not enough for rebuilding. To curb this, you can request an insurance agent and if possible, a home replacement cost estimator to provide you with an accurate figure of what it would cost to rebuild your home. You can also get the average cost of rebuilding per square foot from builders, real estate agent, building association or a contractor from your area. After you have the rebuilding cost figures, you should check if your home owners insurance coverage is enough and if it is not, you should increase it. You should also ensure that you have enough coverage for your personal possessions. If the figure it is not enough you can include riders especially for valuables such as jewelry.
Assuming you are covered for flood
The standard homeowners insurance does not cover against flood. If you live in flood prone areas, you should get coverage. The coverage is easy to get considering it is a federal program and the rates depend on the amount of coverage that you want and the risk of flooding.
Thinking that your deductible is flat
A deductible set as $500, $800 or any other figure may not be the maximum you pay in case of a disaster. If a major disaster such as a hurricane, windstorm or earthquake occurs, the deductible can become a percentage of the coverage. To be on the safe side, you can ask the insurer if the policy is based on changing deductible and if it is, you can get a policy with a flat deductible if it is available. If your deductible is the changing one, ensure you have enough savings to cover it in case there is a disaster.
Thinking that homeowners insurance covers you for sewerage backup or mold
Standard home owners insurance policy does not cover for molds or sewerage backup. In case it has, there are claim limits. You can enquire about additional coverage if your policy does not have the coverage. Sewage coverage cost is low to about $50 per year. Mold coverage is more expensive and you should assess if you need it before taking it. This is if your home is in a humid area or you have an old house that has not been built with materials that are mold resistant.
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