
Buying A Home Is A Big Financial Decision. Here are 7 Mistakes New Home Buyers Make When They Buy Home Insurance
Not Purchasing Water Backup Coverage
(Water Backup covers “Internal Flooding” in your home from Drainage Systems backing up with Waste/Water, Pipes Bursting & Flooding Or Outside Rain Water Seeping In Through Your Foundation. Approximately 40% of All Claims Filed are Water Related. This coverage is not automatically included with your policy. If you have it included in your policy, you have a good Agent because they added it for you. You have the option to accept or decline this coverage. At a nominal cost per year, my recommendation is to ALWAYS include it)
Forgetting To Add Jewelry & Other Items
(Don’t think just because your policy covers Personal Property that all of your items are automatically covered at full value. If your damaged property falls into specific categories, it may be only covered up to very nominal limits, set by your insurer. Items in which the value is difficult to be determined such as Jewelry, Artwork, Antiques, Coin/Stamp Collections & Musical Instruments, Golf or Photography Equipment. While the value to you may be great, it is difficult to discern by an Insurer’s Loss Valuation Methods. Therefore, if you have any of these items, make sure you submit an appraisal or bill of sale to your Agent and they will insure it for you at full value, usually at a $0 deductible.
Buying A Home With Old Roof Or HVAC
(Many times the inside of the house is aesthetically appealing but the house has old bones that haven’t been maintained. If you are paying full price for a home that is in need of a new roof or heating system, you are practically asking for a claim in the near future, which will cost you your deductible, plus the surcharge (Usually 30% for up to 5 Years, in addition to the added stress of talking to Claims Adjusters, Itemizing Damaged Property, Talking To Contractors, etc. Make sure you have a thorough Home Inspection done and consider walking away from a property or negotiating a lower price if the Major Systems are way outdated. Or make sure you update these systems right away after settlement. Many insurers will not insure Roofs over 20 years and it may be considered material misrepresentation and grounds for denial of a claim if you falsify the age of systems on your application.
Confusing Home Insurance With A Home Warranty
(Many Real Estate Agents will happily pay for a Home Warranty if you choose them to represent you during your purchase. However a home warranty and a home insurance policy are quite different. A Home Warranty covers the Breakdown of appliances (Washer, Dryer, Refrigerator, Stove) and Major Functional Systems in your home such as your HVAC or Hot Water Heater. A Home Insurance Policy is designed to cover Catastrophic Events such as Natural Disasters (Hurricanes, Wind & Hail Storms, Fire) When you decide to do business with Legacy Insurance Group, we can build a Home Warranty INTO your Home Insurance Policy so that both catastrophic events and major systems/appliances are covered.
Underestimating Your Liability Exposures
(Dogs, Swimming Pools & Trampolines are great ways to have fun and entertain. However, Injuries occur and when they do they can be severe, especially if the injuries involve surgery, physical therapy or In-Home Care. Whether guests are invited to your home, or they trespass onto your property, you as the legal owner of that property are responsible for any liability claims made against you. It’s important to speak with your agent about maintaining high limits of liability on your home insurance, as well as purchasing Umbrella insurance to protect your Assets/Finances.
Making Upgrades To Your Home
Your coverage limits are calculated based on the specifications of the home when you insured it. If you built a deck, patio, fence or other detached structure without discussing this with your agent, there is a chance your policy is not property covering you. Likewise, if you buy a house with a basic kitchen and basic bathrooms, and then do a custom upgrade, the Replacement Cost Coverage For Your Home could be off by tens of thousands of dollars. This means, in the event of a catastrophe, your Insurer may decide to only replace parts of your home with the information they had available when you first bought your home. Or they may only pay up to the limits on your policy and not beyond that amount. If you are thinking about making upgrades or enhancements to your home, discuss the implications of those projects with your Agent.
Putting In Small Homeowner Claims
(We see this happen usually when the home insurance deductible is set to $500 or lower. Homeowners have a responsibility to perform regular home maintenance and now allow the condition of their home to deteriorate. At a most basic level this is changing your air filter, replacing old fuses in your electrical box and having your HVAC system inspected annually or semi-annually. If you neglect the tree branches in your backyard by not ever grooming or pruning them, it may be more likely that the next heavy rainstorm may cause a branch to come crashing into your window. If you pay $1000 a year for home insurance with a $500 deductible and the cost of a new window is $1000, you only saved yourself $500 but a 30% surcharge the next year takes your Home Insurance Premium from $1000 to $1300 for the next 5 years. Claims should be reserved for Catastrophic Events or Major Damage. Filing 2 or more claims in a 5 year period will make you an uninsurable risk for many Insurance Carriers. Be strategic about putting in small claims and get into the habit of regularly maintaining your home by hiring a handyman to help you with small fixes that will go a long way of reducing potential risks in the future.
Learn more about Homeowners Insurance by calling us at 703-430-1200 and speaking with an insurance expert!
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