4 Common Mistakes When Buying Home Insurance

April 26, 2022

A home is the most valuable asset that most people own, so protecting it with adequate home insurance is a necessity. There are some common errors you'll want to avoid as you evaluate different options. Keep these tips in mind to prevent problems with your coverage.

Pitfalls to Avoid When Buying Homeowners Insurance

1. Underinsuring Your Property

Many homeowners don't carry adequate coverage to replace their home if the worst happens. You need to ensure that your policy will fully cover the rebuilding of your property if your house is declared a total loss following a disaster. Without enough coverage, you'll be responsible for the difference between the insurance payout and what's required to construct a new home.

2. Reducing Coverage for a Lower Premium

Understandably, many homeowners like to save money on their month-to-month expenses. However, you don't want to sacrifice the safety net of full coverage to lower your premiums. Instead, maintain your current coverage and raise your deductible to a higher amount to bring down your premium costs. With this arrangement, you'll save money on your monthly expenses and maintain the coverage you need. If you have to make a claim, you'll need to pay a higher deductible, but you'll save money otherwise.

3. Being Unaware of Exclusions

All policies have exclusions, or items that aren't covered if you need to file a claim. Each policy is different, so it's vital to study yours carefully. For example, your policy might have provisions for fire but may not protect you in the event of a flood. If your area is prone to specific natural disasters, it's wise to make sure your coverage accounts for these risks. Review your policy with an agent to determine if anything should be added or removed.

4. Misunderstanding Replacement Cost Vs. Actual Cash Value

Home insurance falls into one of two categories: replacement cost or actual cash value. Replacement cost insurance pays out the amount that you'd need to replace your home if it were a total loss. Actual cash value coverage only pays the depreciated value of the home at the time of the incident.

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If you need home insurance, contact Phil Taylor Insurance Agency in Clarksville, AR. This independent agency provides competitive quotes for various types of policies, including home and auto coverage. They'll help you find the best policy for your situation. Learn more about what they have to offer online, and call (479) 754-2616 with questions.

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