Mistake #1: Under insuring your house
Insurance experts say failing to have enough insurance to cover the cost of rebuilding your house if it’s destroyed is the biggest mistake homeowners make. Why? For one thing, many homeowners buy only enough insurance to cover the amount of their mortgage. But the mortgage may be, at most, 80 or 90 percent of the value of the house, depending on the original down payment (less if the home has appreciated in value).
For another, some policyholders insure an amount equal to the current value of their homes. But this figure may be far less than the actual cost of rebuilding your house, including labor and supplies (and both may rise sharply after a storm when there’s big demand and short supply).
What should you do? At Colorado Insurance, we use a professional home-replacement cost estimator to evaluate your home’s replacement value. Then we add extended replacement coverage or guaranteed replacement cost coverage. This adds additional coverage to the value of your home.
Mistake #2: Assuming you have flood insurance
This coverage is not part of a standard homeowners contract. If you live near a lake, river or flood plain you should definitely purchase flood insurance. You may be required to have flood insurance in order to get a mortgage in certain places. Inland areas near water can sustain serious flood damage from ground water too.
What should you do? Your Colorado Insurance agent can provide you with flood insurance if you find your home is at risk. Flood insurance is a federal program that accepts everybody who wants the coverage. Don’t delay; there’s a 30-day waiting period between buying a policy and the date your coverage begins. So act now, before the heavy spring rains.
Mistake #3: Thinking you have one flat deductible
You might believe your maximum out-of-pocket cost would be $1000 or whatever amount you said when you bought your policy. Wrong.
In the case of named storms, like wind or hail, the deductible often becomes a percentage of your coverage. So it could be 1 to 5 percent of the insured value. So, if your house is insured for $300,000 but you sustain damage in a windstorm or hailstorm, you could have a $15,000 deductible.
What should you do? At Colorado Insurance, we have insurance companies that have the same flat-rate deductible no matter what.
Mistake #4: Believing you’re covered for sewage backup
Many homeowners’ policies don’t offer this protection or have claim limits.
What should you do? At Colorado Insurance, we always include this coverage in our policies. The cost for this coverage is very inexpensive and it’s worth buying. That’s why we always make sure you’re covered.