Avoiding Common Home Insurance Pitfalls

Lots of people make mistakes when purchasing homeowners insurance; this is especially true for first-time homeowners who have never shopped around for a policy before. There are lots of potential homeowners insurance discounts as well as a number of potential hazards in making this important decision.

But whether you’re new to this type of insurance or you’ve purchased similar coverage in the past, avoiding common home insurance pitfalls can be hard. Let our guide help you navigate these treacherous waters!

After reviewing these homeowners insurance tips, you can use our FREE tool to compare home insurance rates near you.

Pitfall #1: Understand how Claims and your Deductible Work

Like many types of insurance, maintaining a high deductible can really help make your policy more affordable. And this works in a number of different ways. For starters, it helps share more of the financial responsibility between you and your provider. And insurers usually reward their customers for doing so by lowering their premiums.

Raising your deductible can also help you file fewer claims over the life of your policy. This keeps you in good standing with your provider, while also keeping your premiums affordably low. If, for example, a wayward baseball breaks your window and it costs $500 to fix, but you have a $1,000 deductible, you’re more likely to take care of that expense yourself. But if a hail storm turns your roof into swiss cheese, and costs $15,000 to fix, then it’s much smarter to go ahead and file that claim.

Annual Homeowners Insurance Premiums by Deductible

Legend:
$500 Deductible
$1,000 Deductible
$2,000 Deductible

Florida
Connecticut
Oklahoma
Colorado
Louisiana

150
300
450
600
750
900
1050
1200
1350

$1471
$1324
$1192

$1329
$1196
$1076

$1413
$1272
$1145

$1298
$1168
$1051

$1391
$1252
$1127

Read more: Homeowners Insurance in Oklahoma

Pitfall #2: Failing to Maintain the Upkeep on Your Home

Many people make the mistake of thinking that their homeowners insurance policy will cover perils which result from normal wear and tear on your domicile. Often, though, this couldn’t be further from the truth. Water damage and mold from a leaky pipe, for example, is expensive to fix and often not covered by your policy. Taking simple steps to keep your home in good working order (or hiring skilled contractors to help you do so) can help you ward off future expensive repairs.

Pitfall #3: Request a Loss History Report of your Home

Hopefully, you take care of this step while you’re still engaged in the home buying process. This can help you identify what, if anything, may be wrong with your home (and what you may end up having to file a claim on in the near future). Homes with a longer loss history will likely cost more in annual premiums since the likelihood of you filing a claim will be much higher. Requesting a report upfront can help you negotiate a more affordable premium.

Pitfall #4: Failing to Understand What Your Policy Does — and Does Not — Cover

Many people make the mistake of assuming their homeowners insurance policy will cover certain perils that it most certainly does not. Others may skip this process because they don’t think they will ever need to file a claim. But being intimately familiar with the ins and outs of your home insurance policy is essential to your financial protection.

And keep in mind that most policies are flexible. Just because standard policies, like an HO-3 policy, are commonplace and fairly uniform from state to state doesn’t mean that your coverage is set in stone. You may be able to add certain types of coverage (called “endorsements” or “riders”) for extra protection.

Likewise, you may be able to reduce unnecessary coverage for a lower premium. The best way to understand your policy and customize it to your specific needs is to sit down and have a long, thorough conversation about it with your insurance agent.

Read more: Homeowners Insurance: Named vs. Opened Perils

For More Information:

Common Homeowners Insurance Pitfalls

Homeowners Insurance 101

Homeowners Insurance FAQ