New homeowners may be aware they need to purchase homeowners insurance right away to protect their big financial investment. But without any more information, they may wind up with a policy that doesn't provide as much coverage as they really need or is more expensive than they should have to pay.
There are some common mistakes new homeowners make, but luckily, they can easily be avoided.
Accurate valuation: Many homeowners underestimate the value of their belongings and underinsure themselves, according to National General Insurance. It's crucial homeowners properly assess not only the value of the house, but also the value of their personal belongings. If the home is destroyed in a fire or is burglarized, homeowners will need to get proper coverage to replace their furniture, kitchen appliances, electronics, clothes, jewelry and more.
Risks of loss: Any homeowners policy will specifically state what causes of loss it covers and many other events won't be listed. This is often where homeowners get into trouble because they'll assume a policy covers an event, such as flooding, when it doesn't. People should never assume a specific risk is covered. Instead, they should consider what types of risk are needed for their location, if they live in an area that floods often for instance, and specifically ask for a policy that covers this in addition to the common risks.
Price tags: People new to homeowners insurance will assume there's one flat deductible if something goes wrong. However, out-of-pocket costs can vary depending on the event, Forbes warned. For example, deductibles for named storms can sometimes be a percentage of coverage. Homeowners should always specifically ask how deductibles work and can change before purchasing a policy.
Available discounts: Homeowners often don't realize insurance carriers will offer discounts for various safety features on a home, National General Insurance advised. Before purchasing a policy, homeowners should shop around for an insurer who lowers premiums because of security systems, smoke alarms, sprinkler systems, deadbolts and other home features.
Homeowners should also make sure to update their policy over time. The cost of replacing a home and the possessions in it often rises each year, so they may need more coverage. If they update the house with new safety features, more discounts may become available.
Additionally, the first policy they get may not be perfect, but each year they have the chance to update it and shop around for the best price.