If you are mortgaging a home, you will be required to purchase homeowners’ insurance before signing the final paperwork to close out the mortgage and purchase the home. Regardless of how you purchase a home, every homeowner should make sure they have homeowners’ insurance to help cover the cost should accidents or natural disasters arise.
It is not uncommon for people to make mistakes when obtaining their homeowner's insurance. As such it is a good idea to make sure you are as knowledgeable about the process as possible to ensure you have proper coverage for your home.
Here are four of the most common mistakes people make when they purchase homeowners’ insurance
Not getting enough coverage
A majority of people purchase homeowners’ insurance with the intent to satisfy their mortgage lender requirements. What they don’t realize is that these requirements are often far below what would be adequate coverage for your home should you need help during a disaster or if an accident happens.
The majority of homeowners do this in hopes to save money on their premium costs but a large component of homeowners insurance policies is the replacement cost coverage. It is best to obtain enough coverage to be able to rebuild your home in the event that it is destroyed completely. If you merely stick to what your lender is requiring at the time of purchase this could leave you with less coverage money than you actually need. It is also good to revisit how much coverage you have over a certain amount of time as your home value appreciates.
Doing one-stop shopping
Every homeowner’s insurance company is going to offer its own rate and coverage plans. There is no one set law that states how much an insurance company has to cover or how much they can charge for that coverage. For this reason, it is best to get quotes from a few different companies before settling on which policy you are going to purchase. You also want to make sure you are not just going with the cheapest policy. You want to go with a company that can be trusted and is going to come through when you need them even if that means paying a little more.
Not asking about bundling options
Many times, homeowners looking for homeowners’ insurance have other possessions that they currently insure. Most often this means an automobile. It is a good idea to check in with your automobile insurance company or your life insurance policyholder to see if they offer other types of coverage sometimes you will be able to get a cheaper rate on adding another type of coverage through bundling options. You also want to make sure that you’re not just assuming that this bundling deal is the most cost-effective offer however you still want to compare rates with other companies.
Assuming that everything will be covered by your policy
A majority of homeowners insurance policies will cover items like natural disasters storms a fire or unfortunate accidents but that majority will not cover the cost of a flood. You want to make sure you know exactly what your policy is covering and purchase more coverage should you need to.
There are many homeowners for example who have made improvements to their home and then something unfortunate happens only to find out that their policy covered the home before it was renovated and that the difference will not be covered by your insurance company. Or something unfortunate happens to an outbuilding on the property that was never covered in the original policy in the first place.
Is very important to make sure you have correct proper coverage of your home when it comes to insurance. You also want to periodically check in with your insurance company to ensure that you are carrying sufficient coverage as your home value increases.
For more information on purchasing a home in Portland and surrounding areas please contact us anytime.
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