Your home is most likely the largest investment you will ever make so you need to be prepared and knowledgeable about protecting that investment. You shouldn't assume that you will never have a loss, because the average homeowner files a claim at least every 12 years, so even if you don't plan on being at your home for that long you just don't want to take that chance. Also, more often than not, homeowners will find that after a loss they have the wrong coverage amount.
There are some very common mistakes that people make when buying homeowner's insurance that you should read and learn. Find out beforehand what you need rather than waiting until it is too late.
Buying the wrong amount of coverage. The typical homeowner's policy requires you purchase a replacement value, or at least 80% of it. The problem lies in the fact that the replacement value may be far
different than the home's market value or purchase price. Getting your house appraised and getting an insurance value based on that, even though it will be higher and more costly, is the best way to insure you are getting a policy that is proper for you.
Having inadequate liability insurance. Most policies contain liability but they usually only contain on average $100,000 in liability. That may sound like a lot but in the age of lawsuits and medical cost explosions this is very small as compared to what you will actually have to pay. Consider raising your rates to at least
$500,000 to make sure you are well covered.
Buying the wrong form of coverage. This is a very common mistake because most people let their agents tell them what they need. The variations of homeowner's policy are extensive and you should know
what you really need. You should cover your personal property on a named-peril basis, such as fire, flood, windstorm, etc. The structure should be on what is called an all-risk basis, which means it covers everything subject to a list of excluded reasons. It really isn't completely all-risk but it is far more comprehensive
than the specified-perils approach that should be put on your personal belongings.
There are some very common mistakes that people make when buying homeowner's insurance that you should read and learn. Find out beforehand what you need rather than waiting until it is too late.
Buying the wrong amount of coverage. The typical homeowner's policy requires you purchase a replacement value, or at least 80% of it. The problem lies in the fact that the replacement value may be far
different than the home's market value or purchase price. Getting your house appraised and getting an insurance value based on that, even though it will be higher and more costly, is the best way to insure you are getting a policy that is proper for you.
Having inadequate liability insurance. Most policies contain liability but they usually only contain on average $100,000 in liability. That may sound like a lot but in the age of lawsuits and medical cost explosions this is very small as compared to what you will actually have to pay. Consider raising your rates to at least
$500,000 to make sure you are well covered.
Buying the wrong form of coverage. This is a very common mistake because most people let their agents tell them what they need. The variations of homeowner's policy are extensive and you should know
what you really need. You should cover your personal property on a named-peril basis, such as fire, flood, windstorm, etc. The structure should be on what is called an all-risk basis, which means it covers everything subject to a list of excluded reasons. It really isn't completely all-risk but it is far more comprehensive
than the specified-perils approach that should be put on your personal belongings.
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