A home is one of the most valuable assets owned by every person. Choosing a wrong homeowners insurance quote, can cost you more in the future. A cheap homeowners insurance policy does not provide better coverage for your home and may leave you under insured during a disaster.
The cost of Fine Print
It is essential to know what is covered and what is not in the policy so that while filing a claim, the insurer does not deny to pay for what is included in the policy. Also research about the financial condition of the company, its customer service, and their response to claims.
Insure Whizz discusses below about three mistakes which people make while choosing homeowners insurance quotes and the ways to avoid those mistakes:-
1. Under Insuring your house
The common mistake which people often make is to not have enough insurance coverage for reconstructing the destroyed house. Most of the people opt for homeowner’s insurance policy to cover their mortgage amount which may be only 80 or 90 percent of the price of the house, depending on the original down payment.
Another thing which people also do is that they make insurance of an amount equal to the current value of their house. But actually the amount is much less than the rebuilding expense of your home. The labour and supplies may increase rapidly after a sudden storm or flood, when there is huge demand but less supply.
Firstly you need to calculate your home rebuilding cost, including labour and supplies charges. Your insurance policy coverage should be equal to the cost of reconstructing your dream house. Make sure you also receive coverage for your valuables like art, jewellery, antiques and other equipments too.
2. Assuming you have flood insurance
Generally home buyers, who live in low to moderate flood risk areas, do not think of getting flood insurance as a part of their policy. Unfortunately, most of the flood losses occur in these areas. There are several insurance companies who exclude flood coverage from their policies. Other than the coastal areas, inland areas also face serious type of flood damage due to which it is essential to check if your policy covers flood damage.
Nowadays, most of the insurance companies use geo-caching to locate flood prone areas. Try to check with them whether your policy covers flood damage to make investment in flood insurance.
3. Not understanding a deductible
You may not remain aware about the fact that the deductible can increase in certain situations like in the case of a storm or a huge natural disaster like an earthquake.
In that case, take time to understand your deductibles now, and avoid future huge expenses. Check out whether your deductible remains fixed, or changes according to the cause of the damage. Ask your agent whether your deductible changes from a flat rate to a percentage of your coverage during any huge disaster. Also look for multi-policy discounts as by buying various policies such as auto, renters and life insurance with the same insurer can help you save money.