Your home is one of your greatest investments; you need to make sure that it’s fully protected. That’s where home insurance comes in, but it’s not one-size-fits-all. There are plenty of decisions to make when buying your own policy- from coverage limits and extra protection for your belongings to important add-ons like water back up and sump pump discharge or overflow coverage and flood insurance.
It’s easy to make a quick choice when looking for insurance without realizing there could be major consequences (that could cost you thousands of dollars out-of-pocket). That’s why we’ve compiled the most common home insurance purchasing mistakes, so that you won’t make them.
Don’t just look at the price.
Of course, you want a good price. However, sometimes a cheap policy is a red flag. The company may be shady. Talk to friends and neighbors about companies they use. See which ones are endorsed by your union, bank, etc. If you’re worried that the price is “too good to be true,” check the coverage to make sure it’s not missing important items. Also, consider that there are many ways to lower your home insurance costs if price is a concern.
Don’t buy the wrong type of policy.
There’s a different policy for insuring your home when you’re living in it, versus insuring your home when you’re renting it out. Make sure your policy addresses your living situation. If you have the wrong type of policy, there is a chance your claim may not be covered.
Don’t underinsure your home.
It may be tempting to insure your home for the amount that you owe on it, and nothing more. Don’t do it. If your home is worth $350,000 and you owe $50,000 on the mortgage, you should insure your home for the full amount. If you insure it just for $50,000, that’s what you’ll get if your home is declared a total loss. All of that money will go to the bank and you’ll be left with nothing to rebuild. That’s why at California Casualty, we don’t write a policy unless it covers 100% of the replacement cost. Ask us about our 360Value tool which makes sure you’re insured for full value.
Don’t reduce your coverage to lower your premium.
If you’re using a company other than California Casualty, and you decide to reduce your coverage below your home’s value to lower your premium, you’re putting yourself at risk. You won’t have enough money to rebuild. The better way to go is to raise your deductible. This is the amount that you pay out-of-pocket before insurance kicks in. You can do this to save money with your California Casualty policy, too. According to NerdWallet, you could save 20 percent by raising a $500 deductible to $1,000. If you do increase your deductible, make sure that you can cover that deductible should something happen.
Don’t think flood or earthquake insurance is automatically included.
Many people don’t realize that homeowner’s insurance does not include floods or earthquakes. For that, you will need a separate policy. If you’re in a flood zone, you will want that extra insurance. There’s a 30-day waiting period to buy flood insurance so don’t wait until the last minute. Live in an earthquake-prone zone? The same principles apply and you will not be covered by just a regular home insurance policy.
Don’t skip the additional coverage.
As with floods and earthquakes, not everything is covered in your basic policy. Know what is covered and what is not covered so that you aren’t surprised in the event of a loss. Take an inventory of your possessions. Make sure your policy covers the valuables in your home. There’s a theft limit to jewelry coverage, and so you might need an insurance rider, an optional add-on to your policy.
You might want additional coverage for water backup and sump pump discharge or overflow.
If you’re a member of a homeowner’s association, you might consider increasing your loss assessments coverage which goes toward special assessments for expenses associated with your community. However, you may be surprised at what your policy does cover, such as your garden shed or detached garage and its contents. It also covers your kid’s stuff when he/she is away at school, your parent’s stuff if you’re storing it for them while they’re in a nursing home. Those are covered at just 10% of coverage limits, so you might consider additional coverage.
Don’t forget to ask about discounts.
You may qualify for insurance discounts for being part of a professional association, such as groups for teachers, nurses, or first responders. There are also discounts for being 55+ and retired, and for paying in full upfront. You may qualify for a new home discount, or a discount if you have updated your utilities (electrical, plumbing, heating, cooling) in an older home. There are discounts for a new roof and an automatic sprinkler system, for fire and burglar alarms, and for monitored security systems. You can even be rewarded for being a loyal customer. When you bundle your home and auto insurance, you can often qualify for reduced rates, saving hundreds of dollars.
Don’t go it alone.
Insurance is complicated. Your house is one of your most expensive assets. Take the extra step and talk in-depth to a professional insurance agent. At California Casualty we tailor our coverage to you and your home. Your agent can help determine the unique risks for your home and what you need to fully protect it—and that you don’t pay more than you have to.
Don’t buy it and forget it.
Remember to update your policy if you renovate your house. Some companies’ contracts require you to notify them if a renovation exceeds a certain amount. In addition, you’ll want to update your policy immediately if you buy or receive additional valuables, such as jewelry.
Make sure to sit down each year to review your policy. Ask what additional endorsements are available. Review your renewals; policies change and these changes will often be explained in the renewal packet. Consider increasing personal liability to cover, at a minimum, the market value of your home.
Finally, don’t forget to…
- Shop around. Getting competitive quotes will help you determine the right price.
- Ask friends and family members for referrals to their insurance company.
- Research the company. Make sure the company is licensed to work in your state. Check its reviews on the Better Business Bureau and online.
- Look for a company that will be responsive to your needs. Good customer service and claims service are key.
It’s your home. Make sure it’s protected.
This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters, and nurses. Get a quote at 1.866.704.8614 or www.calcas.com