Household Insurance - The pitfalls

There are a lot of home insurance pitfalls that you can fall into if you aren't careful. It is critical that you understand your insurance policy and that you know exactly what is covered and what isn't. You also need to know how much coverage you have. The last thing you want is to find out that you don't have the coverage that you thought you did after a disaster. Some of the pitfalls are fairly common so it is a good idea to learn from the mistakes that other people have made. This will help keep you from making the same errors.

The most common home insurance pitfall that people fall into is not having enough coverage. The main reason that they do this is because they don't understand the difference between the value of their home and their possessions and the replacement value. The purpose of home insurance is to allow you to rebuild your home and replace your possessions if they are destroyed. That means that you have to have enough insurance to actually replace your possessions at the current prices. You may have a ten year old television that is worth very little money. However the replacement value of that television is however much a new television is going to cost you. It is important that you understand that and that you base the amount of insurance that you need on the actual replacement costs.

There are lots of different ways that your home can be damaged and not all of them are covered by your home insurance. This is another pitfall that catches a lot of people they fail to check on what is and isn't covered and they don't have the coverage that they need. For example no home insurance policy will cover flood damage; you need to have separate coverage for that. Depending on where you live your home insurance may not cover earthquake or wind damage either. In areas where earth quakes are likely or where wind damage is likely you are going to have to purchase additional coverage to protect yourself from these dangers. The last thing that you want to do is find out after your home has damaged that your home insurance doesn't cover it.

Another pitfall of home insurance is not understanding what parts of your home are and aren't covered. In general a home insurance policy covers the structure of your house and the things inside it. That means that outlying structures and property that is in your yard are not usually covered. The biggest area where this becomes an issue is in the garage. In most cases your garage and the things that are inside it are not covered by your home insurance. Nor are things like landscaping or a gazebo. In most cases you can purchase additional coverage for these things but it is important that you be clear on what is covered and what isn't, the easiest way to do this is to speak to your broker who can deal with the whole process (and will more than likely be able to bring the price down on your existing premium)