Homeowner’s insurance is a necessity to protect your investment. The Insurance Information Institute reported over $51 million in losses paid by property insurers. Still, many homeowners discover when filing a claim that their policies do not offer the coverage they thought.
To avoid ending up in this situation, it is essential to understand your insurance policy completely. This includes watching out for potentially tricky clauses.
Exclusions of certain incidents
Some policies might exclude specific risks, leaving you vulnerable to unexpected events. Review your policy for any omissions that might impact your coverage. Common exclusions include flooding and earthquakes.
High deductibles
A higher deductible can lower your premium, so it is a common method used to get you to buy a policy. However, it also means you will have to pay more out of pocket in case of a claim. Make sure the deductible is something you can comfortably manage if the need arises.
Actual cash value vs. replacement cost
When it comes to reimbursement for damaged items, policies might differ in terms of providing actual cash value (depreciated value) or replacement cost (full cost to replace). The type of coverage you have can make a significant difference in a claim payout.
Limited coverage for valuables
Some policies may place limits on coverage for valuable items, such as jewelry, artwork or collectibles. If you own high-value items, you might need to purchase additional coverage or a rider to adequately protect them.
Unattended property exclusion
If your property remains unattended for an extended period, certain policies might reduce or exclude coverage. It is important to know the limitations if you travel frequently or have a second home.
Renovation and maintenance
If you are renovating your home, be aware that some policies might not cover damages that occur during renovations. You may need to inform your insurer and adjust your coverage accordingly. Also, you may end up with a denied claim if damage occurs due to neglect or lack of maintenance
Homeowner’s insurance policies help safeguard your home, but coverage may not be as it seems. A thorough review of your policy can help you ensure comprehensive protection for your cherished abode.
