Is your home insurance up for renewal? This may be a great opportunity to review your policy with your agent.
Be sure to check out this article to avoid common mistakes people make with home insurance.
What are Common Mistakes People Make With Home Insurance?
Keeping Home and Auto Policies Separate
Assuming All Personal Property Is Covered
Underestimating The Value Of Personal Belongings
Not Informing Your Insurer of Any Changes To Your Home
Declining Water Damage Or Sewer Backup Coverage
Not Understanding the Full Extent of Your Policy
Keeping Home and Auto Policies Separate
Many insurance companies offer discounts when you combine your home and car insurance policies. So if you’re renewing your home insurance, and haven’t already added your vehicle, consider doing so. Not only will you benefit from potential savings, but you can also rest easy knowing that both your personal properties are being overseen by a dedicated agent.
Neglecting Key Information
Being honest and clear with the details you share with your insurance provider is crucial. Your insurance serves to safeguard you and your valued possessions. Failing to accurately communicate information may result in inadequate coverage when you submit a claim.
Additionally, it’s essential to understand there can be significant repercussions for misrepresenting the information you give to your agent. Ensuring transparency is vital for your protection and peace of mind.
Assuming All Personal Property Is Covered
A basic personal home insurance provides coverage for the following, up to the coverage limits specified in your policy:
- Coverage for your dwelling – This covers your home as well as structures that are attached to it (such as a deck or attached garage).
- Detached private structures – The typical home insurance policy also covers structures that are separate from your home but are still on your property (like a detached garage, tool shed or fence).
- Personal property – Home insurance provides coverage for your personal belongings in your home, such as household appliances and treasured possessions, if they are stolen, damaged or lost by an insured peril.
- Liability coverage – Home insurance policies provide liability coverage to protect you if someone not living with you is injured while on your property or by your actions anywhere in the world.
And while your personal property can be insured, it may cover the cost to a certain amount. If you have valuables that are worth more than your coverage limit, be sure to speak with your insurance provider to see if you can add additional coverage for repairs or replacement of damaged valuables.
Underestimating The Value Of Personal Belongings
Some homeowners may underestimate the value of their personal belongings. When shopping for home insurance, you may be asked to itemize or estimate the total cost of your personal belongs. This is to ensure that your agent or broker is providing you with the best package to ensure your items are protected.
While you may not want to overestimate the value of your personal belongings – and pay more than necessary – one suggestion is to complete a home inventory. By completing a home inventory you can keep track of the items you own and assign a value to it. This will not only help you to understand the amount of personal property protection you need but can also help you in the event your items are lost or stolen and you need to submit a claim.
Not Informing Your Insurer of Any Changes To Your Home
Let’s say you’ve successfully renewed your policy and you decide to complete home renovations. Before you begin your project, would you consider discussing it with your insurance provider?
You may wonder why you need to inform your insurance provider of any home renovations, but it’s to ensure that your changes are in line with your current coverage.
For example, the renovation you’re doing may increase the value of your home – should something happen to it – you may find that you’re only insured for the previous estimate. And if you install a water protection device, you may qualify for additional discounts for your policy.
So, speak with your insurance provider before you begin renovations or upgrades.
Declining Water Damage Or Sewer Backup Coverage
Did you know that if a water service line or sewer pipes running to and from your home is damaged it may be your responsibility to getting it replaced, rather than the municipality?
This can cause a flood and thousands of dollars in damage to your home if not taken care of properly. And while people may assume that because they have home insurance they’re covered, that may not be the case. Sewer backup is an enhanced coverage that needs to be added onto an active policy.
It’s recommended that every homeowner should be covered for a minimum of $25,000, especially in older homes or regions that have aging water pipes.
The same is said for water damage. Water is a leading cause of claims in Canada, and while some standard home insurance policies cover water damage caused by burst pipes or appliances, you may need enhanced water protection for overland flooding as well.
Not Customizing Your Policy
We touched on this topic throughout the article, but you may find that many standard home insurance policies may not offer you the most robust coverage and you may need to add endorsements. These enhanced coverage options for protecting your home (or simply known as “add-ons”) provide complementary protection to your existing policy.
Some endorsements options include:
- Coverage for earthquake damage
- Personal Articles Floaters
- Water protection coverage
- Insurance for a home business and/or property in a storage facility
And many more.
Speak to your insurance provider to see if these additional coverage options are available to you.
Inadequate Liability Coverage.
Your home insurance provides you with liability coverage – this is to protect you if someone not living with you is injured while on your property. Some policies come with a standard $1 million in liability coverage with the option to increase it to $2-million.
With rising costs in medical and legal fees, you may want to consider having the right amount of coverage in case you or a member of your household is held liable to any damage, or injuries sustained on your property.
Not Understanding the Full Extent of Your Policy
It might seem like a burden to read your full policy, but it’s important that you have a good understanding of your home insurance policy.
In taking this step, you may find your base policy does not provide the most comprehensive coverage; you could find yourself in a situation where you need to make a claim but do not have enough coverage to replace the items lost or damaged.
So be sure to sit with your advisor, ask what the coverage includes and doesn’t include under your policy.
Do not sign any agreement until you are comfortable with the type of coverage the policy outlines and you’re aware of any exclusions.
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