reviewing a homeowners insurance policy physical document

Top 5 Mistakes People Make When Buying Homeowners Insurance

In 2021, 5.1% of insured homes had to put in a claim. With that number being 1 in 20, that makes it likely that you may have to put in one too.

That means it’s essential to do your research when buying homeowners insurance. The last thing you want is to have a poor policy or insurance company that results in more hassle than there needs to be — after all, it’s stressful enough when something happens to your home without going into a drawn-out aftermath!

Here are the top mistakes people make when buying homeowners insurance, so you know to avoid them.

1. Under Insuring to Save Money

Under insuring is a common practice because people would rather take a risk to save money. It can happen with any kind of insurance, whether that’s auto insurance, life insurance, or in this case, homeowners insurance.

Despite the temptation of paying a low premium to save money, this can — and is likely to — come back and bite you. If you find yourself with a claim that your lower premium doesn’t cover, all of those savings are going to go right out the window when you have to pay an out-of-pocket cost to fix damages that your homeowners insurance can’t help with.

If you can afford it, then make sure you take out the premium that best suits your home’s potential needs regardless of monthly or yearly cost.

2. Choosing the Wrong Company

Perhaps the biggest mistake someone can make when buying homeowners insurance is choosing the wrong company. This can happen for a variety of reasons, whether it’s because the search was rushed or you were pressured into purchasing a policy you weren’t sure about.

Make sure you take your time and sit down and research each company. This involves:

  • Asking a lot of questions — even when you feel annoying!
  • Reading each business’ reviews online
  • Reading the fine print in each of the policies
  • Comparing premiums against what the company covers

It’s also good to ask the opinions of friends and family, who might have good or bad experiences with a company and can share some anecdotes. If you have a bad feeling about an insurance company, there may be a reason for it.

The great thing about homeowners insurance is that you have a lot of options, so there’s no need to stick with a company if you’re not fully satisfied with them.

3. Failing to Ask About Exclusions

When purchasing any personal insurance policy, you need to understand the exclusions. Make sure you read everything and ask your insurance agent further so you can consider the exclusions against the personal risk of what might affect your home.

For example, a very common exclusion is flood damage. While a pipe bursting inside of the home would likely be covered, an outside flood caused by a storm or river overflowing may not be. If you live in an area with a high probability of flooding, you need to make sure this is covered (or have a separate food insurance policy).

14.6 million homes in the US are at risk of an outside flood, so it’s important to think about.

They may also not cover pest infestations or natural disasters — basically, anything that’s considered an external factor.

4. Failing to Update Your Policy

Once you have a homeowners insurance policy, make sure you update it as you grow. You’re likely to gain more possessions, renovate your house, and your family may grow, which could affect these things.

Calling up to change your policy can be a pain, which means many people put it off. They don’t want to deal with it and keep telling themselves they’ll do it in a few days, which grows into weeks — and before they know it, something has happened to the house and it’s now outside what their insurance covers.

They then wish they had made that phone call! Keeping things updated as you go is the best way to do it.

5. Not Shopping Around

Although you may have shopped around when taking out your homeowners insurance policy, it’s important to keep that in mind every time you come to the end of your contract. Remember, you aren’t obligated to stay with one insurance company until the end of time, and opportunities to switch may arise.

Your premium may become too much, you may need to find one with different exclusions, or you may move house and find that your old insurance policy is no longer the best for you.

Regardless of the reason, there are many valid reasons to change.

Make sure you don’t stick with your old one when it’s no longer serving you, regardless if you feel guilty for leaving. Insurance companies will still make plenty of money with or without you, so only stay if it still suits you and is treating you well.

Be Careful When Buying Homeowners Insurance

Because buying homeowners insurance — or any type of insurance — can seem confusing, people often rush it. They buy the first reasonably priced policy they find without checking out the exclusions or looking at the reviews of insurance companies.

Just remember, this mistake may cost you later. Many houses have to make claims every year, and you’ll be very glad if you sat down and did your research to find the best policy for you, if the time comes where you need to make a major claim.

Looking for a homeowners insurance policy in New Jersey? Request a free quote from us today and let’s see what we can do!