When it comes to insurance coverage, consider the advice Smokey Robinson’s mother once gave him, and shop around! Knowing what to look for is one thing, but it’s just as important to know what NOT to do when shopping for your policy to help you better protect your home and family. 1. ONLY FOCUSING ON PRICE
It’s one of the first things you do when you’re shopping: look at the price. And similar to anything else you purchase, it’s important to understand exactly what you’ll be receiving with your homeowners insurance as well. Make sure that your “cheap” policy isn’t less expensive because important coverage has been removed or because the company has inadequate reinsurance. Just like you wouldn’t buy something that’s missing pieces from a store, get what you need in your homeowners coverage.
2. PURCHASING A POLICY FOR THE WRONG OCCUPANCY
People own homes for many different reasons: to fulfill a dream, raise a family, or maybe supplement the family budget with rental income. Who is living in your home directly determines the type of policy you should have. There is a different policy for people who own and live in their home as opposed to people who own a home that they are renting, or even people who own a home that nobody lives in. In some instances, your claim won’t be covered if you have the wrong policy based on the occupancy of your home. This is because each of these situations carries its own unique risks and are priced for those risks. If the occupancy of your home changes, make sure to update your policy accordingly.
3. NOT UNDERSTANDING EXCLUSIONS TO YOUR POLICY
Insurance companies have long done away with “all risk” policies, and customers in high-exposure states found them to be cost-prohibitive anyway. Your homeowner’s policy is meant to protect you in the event of a major, or even semi-major, disaster but does not respond as a warranty plan. Take the time to understand from a comprehensive level what is and is not covered.
4. THINKING FLOOD INSURANCE IS INCLUDED
Many people are not aware that a homeowner’s insurance policy does not include flood coverage. Flood insurance covers your property and/or contents against storm surges and flooding during torrential rains, hurricanes, and tropical storms. Flood insurance can be bought through the National Flood Insurance Program. Your insurance agent can help you learn more about whether it makes sense for you. There is a 30-day waiting period required before a flood policy will go into effect, so it is important not to buy this coverage at the last minute.