- March 16, 2021
- Category: Home, Tips & Advice
Buying a home is a big decision and when buying home insurance there are a few mistakes that are easy to make – especially if you have never purchased it before. With the right insight and help from Cluett Insurance, it is possible to avoid these common mistakes so you can be confident in your coverage.
Underinsuring Your Home
When you buy home insurance, you may think it makes sense to buy enough insurance to cover the amount of your mortgage. In reality, your mortgage may be, at most, 80 to 90 percent of the value of your home (depending on your down payment). You need to think about the cost of materials and labour required to rebuild your home. This could be significantly higher than what you purchased it for. To avoid any financial trouble in the future, insure your home based on the cost to rebuild it.
Failing to Understand Exclusions
Assuming your policy covers everything is dangerous. Most standard insurance policies cover some types of water damage – for example, damage caused by a pipe burst. Damage caused by external sources such as heavy rainfall, sewer backup, or sump pump failure are generally not covered. Speak with your insurance agent to see if you can purchase additional coverage to protect your home in the event of these common events.
Tip: Be aware of the risks surrounding your home. Though you may not be located in a high-risk flood zone, you should still have an understanding of how often floods occur in the area.
Flood risks hav risen in Nova Scotia. Learn how to lower your chances of having a claim.
Not Asking The Right Questions
Insurance can be confusing so do not be afraid to ask your insurance agent a lot of questions. Here are some you can ask:
- Are there any coverage exclusions I need to know about?
- Am I getting all the discounts available?
- How do you handle claims if I need to file one?
The right insurance agent will take the time to ensure you understand the details of your policy. They will be easy to approach, provide answers to all of your questions, and make you feel comfortable with your insurance choices.
Undervaluing Your Personal Belongings
Your belongings could be worth a lot more than you think. If you set your coverage limit too low, you may find you are unable to replace your personal belongings in the event of a claim.
Tip: Do not guess the value of your belongings. Research the cost, create a detailed home inventory list (brand, purchase price, etc.), and set your coverage limit accordingly.
You may also have some high-value items, such as jewelry, that require special coverage. Make sure to get those covered!
Increasing Your Deductible For A Lower Premium
A deductible is the amount you agree to pay out of your own pocket before your insurer will step in and pay the remaining balance of the claim (up to the limit of your policy). A higher deductible generally means your premium will be lower and vice versa. It’s important to choose a deductible you can actually afford to pay. Think about your financial situation and how much you’re comfortable paying out of pocket if you ever need to make a claim.
Every home insurance policy is unique and an important investment to provide you with the protection you need. Failing to get the proper coverage could leave you underinsured. Avoid these costly and common home insurance mistakes by speaking with an insurance agent at Cluett Insurance. We’re here to answer your questions, provide information, and give you a quote. Reach out to us at (902) 466-5328.