Home being one of the biggest investments of our lives, it becomes vital to protect the same from unforeseen risks and damages. This is the reason why home insurance policies exist. When you purchase a home, you take a lot of factors into consideration, such as the neighbourhood, nearby market place, availability of public amenities, etc. Likewise, it is also important to choose the right kind of home insurance policy.
Unfortunately, most of the home insurance buyers do not think too much before zeroing down their option. As a result, they end up making a lot of mistakes, which they regret later. So, to make sure you do not end up committing those mistakes, let us empower you with the right kind of information. In this article, we have listed five mistakes to avoid when purchasing a home insurance policy.
Mistake # 1: Under-insuring your home
This is one of the most commonly committed mistakes by the home owners. When home owners make an estimation of the replacement or re-construction cost of their possessions, they fail to take into account the rising cost of supplies and labour. Like we know, the cost associated with home construction supplies and labour is increasing with the passage of time. For this reason, when you make an estimation of the coverage which would fulfil your requirements, you must discuss in detail with the insurance agent. You can also get in touch with professionals who are good at estimating home-replacement cost. It is better to spend a little more on premium rather than feeling cash strapped at the time of rebuilding your home.
Mistake # 2: Making assumptions about the coverage
It is true that even natural calamities like earthquake, storm, and flood are included in the home insurance policy. However, the inclusions vary from insurer to insurer. For this reason, as a wise customer you must make sure that the insurance company you are planning to choose covers almost all sorts of natural calamities or act of God. Some insurance companies do on include damages resulting from mold, faulty drainage, blocked sewage, etc. Basically, damages that happen due to the negligence of the home owner are not included in the insurance policies.
In case your house is located in a region that comes under flood zone, you must check the terms and conditions of the policy in detail before signing the documents. Never live under assumptions.
Mistake # 3: Not updating your home insurance policy
With the passage of time, a lot of things can change in a policy. Every year, the insurance companies bring in some changes to make their policy even better. As a smart customer, you need to stay updated with the latest changes. A lot of home owner purchase a policy and do not care about reading through the notifications. As a result, they are not able to avail the benefits brought in by the changes in the policy. No matter what alternations happen, you must always stay in touch with your home insurance provider. It will also help you make sure that you are completely protected.
Some home owners think that they will save on their premium by avoiding these changes; well, it is absolutely a bad idea. Insurance policies are upgraded so that they can prove more beneficial to the customers. So, don’t miss the goodies.
Mistake # 4: Going for actual cash value
A lot of insurance companies provide you two options; you can either opt for actual cash value of your belongings or go for a replacement of the same. Electronic items and vehicles have high deprecating rate. When you opt for actual cash value, the insurance company covers the present worth of the commodity or item. So, suppose last year you purchased a TV at INR 20,000; in the present time, its value could be only INR 10,000 or even less. So, it is you who have to pay the difference out of your pocket. For this reason, it is better to opt for replacement cost.
Mistake # 5: Not asking the right questions
For a common person, it can be quite confusing to understand the complex terms and conditions of any home insurance policy. This is the reason why the insurance companies appoint insurance agents. The agents are here to answer to your queries and clear your doubts. Questions related to deductibles, claim procedure, policy renewal, discounts, etc. are of prime importance. Rather than keeping yourself in a state of confusion, you should ask as many as questions to the insurance agent.
So, those were the five common mistakes that most of the homeowners make at the time of purchasing a policy. Remember, the policies are aimed at making your life secure and better. All you have to do is purchase the right one.