5 Expensive Home Insurance Mistakes You Should Avoid
Take a look at five of the most expensive home insurance mistakes you can make to ensure you are never saddled with a home repair bill.
Published: Saturday, November 26th 2016
When it comes to taking out home insurance, you may think it is a 'tick the box' kind of insurance and covers every part of your home - yet, that's where you're wrong.This kind of mistake is just one of many which could cost you dearly when a crisis hits and you are stuck with the bill.
If your house is underinsured, there are serious financial consequences when disaster strikes. Have you renovated, updated or bought new household contents without updating your policy?Many homeowners only buy enough home insurance to cover their mortgage, which is far less than the actual value of the home. Similarly, you may buy insurance that is the same as the value of the house. The problem arises when you have to rebuild part of, or your entire home which then costs more than the value of your policy (including labour).
2. Over-insuring Your Home
In the same vein, you could be over-insuring your house whereby the cover you have taken out is more than you would ever need.The best point of action is to have your home appraised to find out its true value. An insurance broker can also tell you exactly what your insurance needs are and the value to insure your house for.
3. Assuming You Have Flood, Mould and Sewage Backup Cover
Never assume you are covered for everything when taking out home insurance. As mentioned earlier, home insurance is not a "tick the boxes" kind of insurance.Many homeowners have fallen short when assuming that all policies covered household issues like mould, sewage backup, and flood damage. Make sure you read your policy carefully to ensure you are covered for every situation.
4. Not Understanding a Deductible
What exactly is a deductible in a home insurance policy? It is the amount stipulated in your contract that you are liable for in the event of a claim before the insurance provider pays out the rest of the claim. Think of it as the car insurance world's 'excess'.The problem arises when people think a deductible is a flat rate when, in most cases, it will be a percentage of the total insurance value. The deductible, therefore, becomes much higher than you would have thought. Make sure you ask what kind of deductible you will be liable for.
5. Going With The First Insurer You Find
Insurance can be confusing and may make you want to get it over and done with as soon as possible. But, like any insurance, it is always better to compare insurance quotes from a variety of insurance providers. You should start to see how different insurance providers charge different amounts for the same coverage.Remember, home insurance is pretty much until the day you decide to sell your house, so even a slight decrease in monthly premiums can make a big difference.Emphasis is on the need to shop around for insurance companies before you make your final choice. This is especially important when it comes to cost. For the exact same coverage you will find that different insurers charge differently. Even though the difference may be minimal, when the regular payments are added up, there is a big difference.