If you're like most people, your home is probably your largest investment. Homeowners insurance protects your investment and ensures that you are financially covered in the event of a total loss, damage, or theft. Since your home and belongings combined are worth a lot of money, it is important to have the right type of homeowners insurance policy. If you're buying a new homeowners insurance policy soon, avoid the following common mistakes:
Overinsuring Your Home
While homeowners insurance is very important, there is no reason to pay more than you have to for it. A lot of homeowners make the mistake of buying a policy that provides too much coverage because they fail to recognize the difference between the cost of rebuilding and the home's value if it was sold. The cost to rebuild is often a lot less than the actual value of the home; base the size of your policy on the cost to rebuild or pay off your mortgage and then add in the value of your belongings.
Not Reading the Policy Before Purchasing
Reading an entire homeowners insurance policy before buying it does not sound like a lot of fun, but it is important to do. Prior to purchasing a homeowners insurance policy, it is essential that you know exactly what your policy covers, what your deductible is, and the total value of your policy. The last thing you want is to need to file a homeowners insurance claim only to find out that the issue that you need financial assistance getting fixed is not covered by your policy.
Neglecting to Secure All Possible Discounts
Most homeowners insurance companies offer a number of discounts, but you often need to ask for them. If you have an auto insurance or life insurance policy with the same company, you may qualify for a discount for bundling insurance. Adding an alarm system or making other improvements to your home can also result in lower premiums.
Failing to Understand Exclusions in a Policy
Every homeowners insurance company is different, and each one has their own policies and terms that you have to agree to. There are a few things that may void your insurance policy. For example, some homeowners insurance companies will not provide a policy for a homeowner that owns a breed of dog that is considered especially aggressive. Others don't provide coverage if there is a trampoline in the backyard since there is a high risk of people getting injured while using it. Make sure you know what exclusions your homeowners insurance company has so you don't accidentally void your policy.
Talk with different insurance companies for additional info and to compare policies and rates.