For even the most ardent shopaholic, shopping for home insurance probably doesn’t rank very high on their “to-buy” list. However, it’s one of the most important items you’ll ever purchase. Buying home insurance isn’t something they teach you in school, so the burden is placed on homeowners to educate themselves about the coverage they need to protect their homes and families.
As a resident of the Sunshine State, where you’re never more than 60 miles away from the beach, it’s extremely important to be informed about home insurance. As you shop for homeowner insurance in Florida, try to avoid these six common mistakes people typically make when looking for home insurance coverage. (Tweet These Tips)
Not Understanding Home Insurance Terms or Policies
One of the best things you can do is understand how to read a home insurance policy before you start the shopping process. For instance, do you understand the difference between replacement cost coverage versus actual cash value coverage? Also, did you realize that your policy affords you coverage to restore your home to its original pre-loss condition? If building codes have changed since you purchased your policy, you’ll incur out-of-pocket expenses to bring your house up the current code requirements, unless you have Ordinance and Law coverage. It’s important to get acquainted with the fundamentals of a home insurance policy to ensure that you don’t have too much, or too little, coverage. Don’t be afraid to ask questions when speaking to an agent or an insurance company representative. They are there to help you determine the best coverage for your home.
Buying Homeowners Insurance Based on Price
A low cost isn’t always the best deal, especially if the financial stability of the insurance carrier is not strong enough to be there for you when you file a claim. All insurance policies – and all insurance carriers – are not alike. Shop around and compare insurance companies, taking discounts, exclusions and other coverage factors, along with the carrier’s technology and customer service offerings and its Financial Stability Rating, into consideration.
Not Knowing Your Dwelling Coverage Needs
Dwelling coverage (also known as Coverage A) offers protection if the physical structure of your home is damaged as the result of a covered peril. You want to make sure this coverage is enough for you to be able to rebuild your house. If you can’t determine how much dwelling coverage you need, contact an agent for assistance.
Tip: The cost to rebuild your home may not be the same as its real estate value. In fact, that amount might be higher than your home’s market value, especially when you consider that it has to rebuilt using current, more stringent building codes and costlier materials.
Not Obtaining Sufficient Coverage for Valuable Items
Because most people don’t read their home insurance policy until after a loss has occurred, they’re often surprised to find out that their valuable vinyl or stamp collection, engagement ring, or family heirloom surpasses their coverage limits. When purchasing home insurance, you’ll probably need to purchase Scheduled Personal Property coverage to better protect your high-value items or sentimental items. Depending on the value of the item, some insurance companies require you to provide documentations and an appraisal of the item.
Not Picking the Right Deductible
What’s a deductible? It’s your share of the amount required to replace your lost or damaged items. Choosing a higher deductible can lower your premium, but you’ll have greater out-of-pocket expenses in the event of a loss. If you choose this option, it’s a good idea to create an emergency fund for this purpose.
Did you know?: Homeowners in Florida and many coastal states have two deductibles: one that’s specifically for damages from hurricanes and a second that applies to all other covered perils. While the “all other perils” deductible is usually a flat fee (often $500 or $1,000), the hurricane deductible is a percentage (generally at least 2 percent) of the Coverage A amount. For instance, if your Coverage A amount is $200,000, you’ll be responsible for the first $4,000 worth of damage to your home before your insurance company will pay for any repairs.
Failing to Understand Exclusions
It’s equally important to know what your insurance policy doesn’t cover as it is to know what it does cover. Considering that Florida has the most people and property exposed to hurricanes in the country, and storm surge (and its resulting flooding) causes the most damage after a hurricane, it’s vital for Floridians to know that flood insurance isn’t included in your standard home insurance coverage. You will need to purchase a standalone flood insurance policy to be covered in the event of a flood. Your agent can help you better understand other important exclusions and discuss options to help you address them.
The best consumer is an informed consumer, and hopefully, the information above will help you feel more prepared to shop for insurance. Let us know if you have any other suggestions about the home insurance shopping process by commenting below.
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Also: Get an instant home insurance Florida quote with the insurance coverage you need.