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To find the right home insurance policy, you need to strike a balance between affordability and adequate coverage. You want to cover as many risks as possible, but you also don’t want to overpay for insurance you’ll never use. The best tips for buying home insurance include understanding exactly what you want to insure and knowing the value of your property.
“There are many factors that can impact your homeowners’ insurance policy,” said Justin Vedder, Vice President at CastleLine Risk and Insurance. “To avoid making mistakes, take the time to research your options, understand the factors that may impact your policy, and work with a trusted company to provide guidance.”
If you’re exploring your options, here are six common mistakes to avoid when shopping for a policy.
1. Not Knowing Your Property Value
If you suffer a loss, insurance will pay to replace any lost or damaged property. In this event, you’ll want to make sure the payout will be adequate to replace your home and its contents. If you discover you’re underinsured after the loss occurs, you may need to pay some replacement costs out of pocket. To avoid this risk, stay up to date on home values in your area so you know how much it would cost to rebuild and update your policy accordingly. You can also track the value of your personal belongings using a home inventory tool. Keep in mind that the replacement cost of your older items, like appliances and electronics, may be different from their current value.
2. Forgetting to Schedule Valuable Items
The reimbursed value of high-end items like jewelry and art may be capped in a basic home insurance policy. If you have expensive items, make sure they’re scheduled within your policy and insured up to their full value.
3. Failing to Consider Flood Insurance
If your home is located in a flood zone, you may need to purchase additional insurance through the National Flood Insurance Program. This program is administered through individual insurance agents, and policies can be purchased at the same time you buy your home insurance. Water intrusion can be one of the most confusing aspects of a home insurance policy, so be sure you understand which types of water-related losses are covered to determine if you need additional insurance to cover your risk.
4. Not Asking for a Multiplan Discount
When purchasing insurance, don’t forget to ask about multiplan discounts. Auto, life and health insurance or coverage on another property are examples of commonly held policies that can be handled by the same agency. Often, providers will offer discounts when you bundle your policies, so you can save both time and money. While you’re at it, you may also want to expand your liability coverage as your overall assets grow and consider an umbrella policy in addition to your home insurance.
5. Failing to Shop Around
Shopping around is one of the most important tips for buying home insurance and the best way to ensure you’re getting the right policy for you. Insurance prices can vary widely from agent to agent, so don’t hesitate to make calls or request price quotes. And be sure you understand the key elements of different policies. The differences in pricing may be related to lower coverage ceilings, which means you’ll need to pay more out of pocket should you experience a loss event.
6. Forgetting About the Policy After You Buy
After you purchase home insurance, you may be tempted to just stuff your policy in a drawer and pay the annual premium when the bill arrives. But as your life changes, your policy may need to change as well. Take a look at your coverage amounts each year to determine if they’re still adequate. Valuation tools like National General’s Home Rebuild Cost Analysis can provide you with an updated value of your home and the current cost to rebuild. You may need to increase certain limits as you acquire more items.
Insurance is the best way to manage the costs of an unforeseen event affecting the value of your home. Your mortgage provider will require you to purchase a basic amount of homeowners insurance, but be sure to carefully consider how much coverage is appropriate given the current value of your assets.
The information contained herein is not an offer to sell or a solicitation to buy any insurance product. No insurance product is offered or will be sold in any jurisdiction in which such offer or solicitation, purchase or sale would be unlawful under the insurance or other laws of such jurisdiction. Some products and services may not be available in all jurisdictions. The information contained herein is provided for general marketing purposes only. For terms and conditions of coverage, please refer to the specific insurance policy.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Owners.com, Altisource or any other Altisource® business or entity. The foregoing content is not intended to constitute, and in fact does not constitute, financial, investment, tax or legal advice by the author, Owners.com, Altisource or any other business or entity.
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