Common Mistakes People Make When Trying to Determine How Much Homeowners Insurance They Need
Wednesday, May 13th, 2009 Subscribe To Our Feed
When you’re buying a house one of the many things on your huge list of things to do is to find a good homeowners insurance policy. There’s a million things to do, a huge number of forms to fill out, so much paperwork to sign when you’re purchasing a home that you may wish to just apply for the basic homeowners insurance policy suggested by your real estate agent but with something as important as homeowners coverage you should really do your homework to make sure you get the best homeowners insurance coverage, the best price, and to make sure you have adequate coverage in the areas that you need it in. We are going to talk about some common mistakes that people make when they are on the hunt for homeowners insurance.
One of the most common mistakes that people make is to say to themselves “okay, I paid $400,000 for my house so I need $400,000 worth of coverage.” What you need to think of is not how much you paid for your house but rather what it would cost to rebuild. A large part of the cost of buying a house is the land that the house is built on. If your home were to level by a tornado or hurricane you would need enough coverage to rebuild the house, not the dirt that your house was built on. Once you have an idea of the amount of coverage you need you can get an instant homeowners insurance quote online to help you find the best possible price.
Another common mistake that people make in regards to homeowners insurance is not reviewing their policies from time to time. Things change over time, if the cost of building materials increases considerably you may need to increase the amount of your insurance. This is especially true if you were to build an addition to your house. Some people learn this lesson the hard way. They build an addition to their house that costs $50,000 then the house burns to the ground and the insurance policy doesn’t pay enough to rebuild the entire house.
Another common mistake and a lesson that too many people learn the hard way is that some things are not covered by a standard homeowners insurance policy. Perils such as floods and earthquakes are not covered by a basic policy and require additional insurance. In areas where floods and earthquakes are not common this coverage is quite inexpensive and may still be a good idea. You don’t need to live on the banks of a river to experience flood damage. In a strong rainstorm the storm drains can back up and overflow and this causes flooding even in areas where you wouldn’t expect flooding. Just a few inches of water inside your house can cause thousands of dollars worth of damage. So just know that earthquakes and floods are not covered in a basic policy and may be something that you want to think about.
One of the biggest mistakes of all is the one mentioned in the first part of the article which is just to sign up for any homeowners insurance policy just to get it out of the way and cross it off of your to-do list. It takes very little time to get an online homeowners insurance quote but if you spend a little time shopping around, getting quotes from multiple companies and choosing the one that offers the best coverage for the least amount of money, this small amount of time could ultimately save you thousands of dollars.
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