With the daily news filled with stories of devastating wildfires, hurricanes, flooding, and tornadoes, families are understandably concerned about protecting themselves and their assets from these dangers. Since the home is the most expensive asset most families will purchase in their lifetime, protecting its value is crucial to their overall financial health.
While little can be done to prevent unexpected weather events and natural disasters from occurring, making sure your home is fully insured can offer the reassurance families need when these types of losses occur.
Replacement cost or market value
One of the costliest financial mistakes homeowners make when purchasing home insurance is choosing an actual cash-value policy instead of a full-replacement policy. Actual cash-value policies only pay out up to the amount of the home's current market value at the time of the loss. In contrast, a full replacement policy covers the amount of cost involved to rebuild the same size, type, and style of home that was lost, including labor and materials. Labor and material costs rise nearly every year in the construction industry, making the full replacement value policy the better value in most cases.
Riders and additional coverage
Another common mistake homeowners make when purchasing home insurance is failing to purchase additional coverage or riders to ensure they have adequate protection. For example, a homeowner who owns an expensive collection of jewelry, firearms, or other valuables may not be fully reimbursed for the value under a basic home insurance policy in the event of a loss.
Most home insurance policies are sold with relatively small coverage amounts on these types of possessions, often just a few thousand dollars. If a collection valued higher than the basic amount is lost due to a fire or other casualty, the homeowner will not be fully reimbursed. By purchasing appropriate riders, however, they can opt to fully cover their valuables and avoid potential losses.
Homeowners must also know that most home insurance policies do not cover flood damage to the home. In order to be covered, homeowners must usually purchase a separate flood insurance policy.
Annual home insurance checkup
The last tip, scheduling an annual home insurance checkup, is likely the most important one for homeowners who want to make sure the home is always adequately protected. As families grow and change, their homes and possessions are likely changing, as well.
Opting to meet and discuss their home insurance needs on an annual basis with an insurance company, such as Cypress Insurance, can ensure your home is always optimally insured and protected.Share