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Don’t end up regretting not having the right home insurance coverage.
Key points
- Homes are valuable assets that can be protected by insurance.
- Homeowners should avoid buying coverage that is too cheap and doesn’t provide enough coverage.
- It’s important to get regular quotes and understand what is covered by the policy.
Buying homeowners insurance isn’t just important because mortgage lenders require it. Property owners spend hundreds of thousands of dollars purchasing their homes and furnishing them. As a result, it’s crucial to get sufficient protection for this valuable asset and for the contents of it.
The right homeowners insurance coverage can ensure that if a property is damaged or destroyed, the property owner doesn’t sustain substantial financial harm that could ruin their net worth. But buying the right coverage involves avoiding four huge mistakes.
1. Buying the cheapest coverage
One of the biggest mistakes people make when buying home insurance is purchasing the lowest-priced policy without regard to whether the company offering it is a good one.
When a disaster happens, no homeowner wants to fight with their insurer for months just to get the claim covered. After all, most people want to get back into their repaired or rebuilt home right away after something goes wrong — not deal with a lot of stress at a difficult time.
Insurers that have a poor reputation may improperly deny claims, or may try to pay out less than they should — both of which can be a huge problem. To avoid this, homeowners should research the reputation of any insurer they are considering. If the cheapest option has a poor reputation, it may be best to steer clear.
2. Buying too little coverage
Another huge error involves buying too little coverage. This could mean having too low of a limit on the coverage for the house, for personal property within it, or for liability in case someone gets hurt on the property. Or it could mean opting for the cheaper market value coverage, rather than the more expensive replacement value coverage.
Replacement value coverage will pay to rebuild the property as it was if something goes wrong. And it will allow the property owner to receive enough money to replace destroyed possessions.
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