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Insurance Mistakes to Avoid
It’s normal to be paranoid about the fine print in your insurance policy. Insurance policies are often filled with difficult and confusing clauses, unnecessary legalese, and highly specific language. These fine print elements can make or break your future insurance claims, so be sure you know what you’re getting into before you sign on the dotted line. If you’re in the market for a new insurance policy, check out our list of mistakes to avoid.
DON’T JUST LOOK FOR THE CHEAPEST POLICY
Ultimately, when it comes to insurance policies, there are certain financial realities to consider. If you can’t afford the high monthly premiums, you may have to settle for a higher deductible. However, if you have any wiggle room in your finances, it’s a good idea to invest in full structural coverage. To be truly secure in your policy, you need to have coverage equivalent to the cost to rebuild your home. If you are underinsured, you may be left without recourse in the event of a complete loss.
Here at Avner Gat Inc., we usually see homeowners purchase insurance up to the amount of their mortgage, but not higher. This is risky for many families, especially in the competitive California real estate market. If you’ve owned your home for a few years, there’s a good chance it will have appreciated in value. We suggest ensuring your home for the amount it would cost to rebuild, plus the amount the home will increase in value before the end of your policy.
DON’T ASSUME YOU ARE COVERED FOR MOLD, SEWAGE, AND FLOODS
Did you know that many policies do not automatically offer protection for mold, sewage backup or floods? If you live in an area that is prone to flooding, like many coastal cities in California, it is especially important that you speak with your provider about adding this coverage. Sewage backup coverage tends to be reasonably priced, and it is well worth the cost in the event of an accident.
If you live in an older home, or if you own an apartment complex with a sewage system that experiences a lot of wear and tear, you should contact your provider to learn more about sewage coverage. Additionally, many policyholders think of floods as natural disasters and assume that coverage will be included in their policy. Fact is, flood coverage is not part of a standard insurance policy. Consider purchasing this coverage to protect your belongings from hurricanes and groundwater flooding. To see if you need flood insurance, visit FloodSmart.gov to help with your determination.
DON’T BELIEVE YOU HAVE A STANDARD DEDUCTIBLE
Often when acquiring a new policy, new homeowners will look for the word “deductible” in their policy and believe there is one standard number for an accident. Unfortunately, many people don’t know that your deductible can vary depending on the cause of the damage. It’s always a good idea to speak to your provider about a flat rate deductible. If you cannot agree on a flat-rate, start dedicated savings account for any emergencies that may arise.