Hindsight should not be your instructor when it comes to home insurance. Let us discuss the typical (and excruciating) errors made by actual people and how you can avoid having to learn these house insurance lessons the hard way.
First, “I assumed that water damage was covered.”
The drywall was already bursting from a ruptured pipe, and Sophie’s kitchen floor was saturated when she returned after a weekend getaway. After filing a claim, she learned that water damage from plumbing leaks was not covered by her policy.
The challenging lesson? Water damage is not always insured.
How to proceed:
To learn more about water damage, check your policy.
If you reside in an older or flood-prone home, think about adding endorsements.
2.”I did not record anything.”
Mike and Jen’s tools, bikes, and camping equipment were destroyed in smoke when an electrical fire ripped through their garage. They could only list what they recalled, though, because they had no pictures or receipts, and the insurance amount was much less than what they had anticipated.
The challenging lesson? Low compensation for lack of paperwork.
How to proceed:
Record or take pictures of each closet, drawer, and room.
If at all possible, maintain a digital inventory that includes receipts and estimated values.
Keep this data elsewhere or in the cloud.
Marissa’s insurer paid for the repairs after a tree fell through the roof during a storm, but the limits of her coverage were predicated on out-of-date replacement costs. She had to pay thousands out of herself due to new building requirements and increased labor costs.
The challenging lesson? A seatbelt that only functions half the time is analogous to having inadequate insurance.
How to proceed:
Every year, review your dwelling coverage.
Modify your policies to account for growing labor and material expenses.
4.”I did not read the fine print.”
Tom mistakenly believed that his coverage covered “everything” until he found out that mold was excluded. The remediation bill of $9,000? His own.
The challenging lesson? The cost of assumptions is high.
How to proceed:
Read more than just the headlines. Examine the exclusions.
Mold, earthquakes, floods, and sewage backups are examples of common exclusions.
Inquire with your insurer about riders or add-ons for particular risks.
5.”I neglected to inform them about my renovations.”
Erin renovated her kitchen and built a stunning sunroom. However, her insurance said she had not updated her policy, so the increased square footage and features were not covered when a storm struck months later.
The challenging lesson? Your insurance needs to be updated when your home changes significantly.
How to proceed:
Notify your insurance provider of any additions or renovations.
Your coverage should reflect any significant improvements that raise the value of your house.
After a significant alteration, such as a new roof, solar panels, a finished basement, etc., review your policy.
6.”I Opted for the Lowest Cost Policy”
Dan discovered too late that he had selected a low-cost insurer with subpar customer support and sluggish claims processing when the catastrophe struck. Weeks of unanswered calls added to the emotional strain of the injury.
The challenging lesson? The optimal policy is not usually the one that costs the least.
How to proceed:
Examine ratings for customer service and coverage in addition to price.
Examine actual evaluations, paying particular attention to the company’s claims handling practices.
You might end up saving thousands of dollars (and your sanity) later just a few more dollars per month.
Concluding Remarks: Your House Is Worth More Than Sadness
More than just walls and a roof, your house is where you have created memories, where your children first walked, and where you go to unwind after a long day.
That should be covered by insurance. However, far too frequently, people are unaware of their policy’s shortcomings until a calamity occurs.
Those who have experienced it firsthand advise against waiting for a storm, fire, flood, or theft to see whether your insurance is sufficient.
