Guest Blogger: Top 5 Mistakes Homeowners Make when Purchasing Home Insurance

Guest Blog #199, Entry #687, October 3, 2011

Homeowners insurance is one of those subjects most of us don’t like to think about, and hate to admit that we don’t fully understand. Whether you are buying a new home and it’s your first time, or you are contemplating if your current policy has enough coverage, today’s post is for you. My Guest Blogger gives tips to prevent common mistakes when purchasing homeowners insurance.

Are you aware of what mistakes you may make with your homeowners insurance?

Most homeowners will have some form of home insurance in place – but do they have the right level of protection?

To make sure you avoid the common home insurance pitfalls, take a look at these top 5 mistakes.

1. Undervaluing contents

Many people simply don’t have enough contents insurance in place. Your level of protection should cover the collective value of all your possessions. If there was a house fire, for example, everything you owned could be destroyed. Don’t underestimate the cost of all your personal items when added together.

2. Incorrect rebuild cost

The amount of buildings insurance you need is based on the rebuild cost of your property. Many people confuse this with the market value of their home.

The rebuild cost is the amount it would take to totally rebuild your property from scratch, rather than the amount it would sell for. The rebuild cost is usually lower than the market value. Giving an inaccurate figure could mean you’re paying too much for cover that you don’t really need.

3. Not listing items

Some items will not be automatically included under your insurance policy. It’s likely that some high-value items (such as laptops and jewelery) may need to be individually specified on your policy. If you fail to list them, they won’t be covered by the standard insurance.

4. Not telling the truth

In order to get cheaper premiums, some people are not fully truthful on their insurance application. Other people may give inaccurate information because they’re unsure of certain details. It’s crucial to be absolutely honest and accurate when applying for insurance, otherwise a claim you make in the future could be deemed invalid.

Feel secure when choosing homeowners insurance

5. Ignoring excess

Don’t forget to check any excesses attached to your policy. This is the amount you’d have to pay out of your own pocket in the event of a claim. You may find that some cheaper policies actually have large excesses attached. If you ignore the excess amount, you could have a costly shock when it comes to making a claim further down the line.

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