4 Expensive homeowner’s insurance errors to avoid

When record-setting snows layer the Northeast of the country and tornados sway the South, a majority of homeowners find themselves standing with inadequate insurance coverage than what they had expected. A situation that causes nasty, unanticipated expenses. So before the next big snowfall hits, be proactive and remain prepared. It’s not easy to escape Mother Nature, but you can protect your abode by checking if it has the necessary protection. It’s better to know what is covered and what’s not beforehand, and not when you have to file a claim. Go through your homeowners’ policy and see if you’re making any of these four goofs, and take necessary steps if you are. Mistake 1: Remaining underinsured According to a 2009 study, two-thirds of the U.S. homes are underinsured. It’s your biggest mistake if you don’t have adequate coverage to rebuild your home if it gets destroyed in a disaster. While some homeowners buy insurance only to cover the amount of their mortgage, some insure an amount equal to the current value of their homes. However, this figure can be far less than the actual cost of rebuilding your home if included labor and supplies (and prices of both increase after disaster strikes). Mistake 2: Assuming flood insurance is included Flood insurance is not a part of the standard homeowners policy. You need to buy it separately. And you should buy it if your home is situated near a lake, river, floodplain, or the ocean. You should purchase separate flood insurance too if you reside in a hurricane-affected area. Flood insurance is just like a rider that is very easy to avail. It’s a federal program that accepts applications from everyone who wants to avail the coverage. If you want, you can even avail a policy from a private career. Depending on the risk and the coverage amount the price will vary. Click here to find a sampling of policy premiums for different amounts of flood insurance coverage. Mistake 3: Assuming you’ve only one, flat deductible You are perhaps under the notion that your maximum out-of-pocket cost would be $500, $1,000 or whatever you agreed to while purchasing the policy. Wrong. In the case of named storms, like hurricanes or earthquakes, the deductible often becomes a percentage of your coverage. It could end up being 1% - 5% of the insured value for a flood, or 10% - 15% in case an earthquake hits. So if your home has a coverage of $300,000 and you sustain damages in an earthquake, you might have to pay $45,000 deductible when you file a claim. Mistake 4: Assuming you’ve coverage for mold or sewage backup Another false notion that many homeowners have. Most homeowner’s policies don’t offer this protection or have claim limits.