Buying a home is an exciting time, but there is a lot of work that goes into it. Unless you are buying your home in cash and in full, you will need to get homeowners insurance in order to protect the lender’s interest. This is pretty standard. However, homeowners insurance can be pretty confusing with most pages of the policy going unread.
Not fully understanding your homeowners insurance policy can put you at risk. For example, you could be on the hook for repairing or even replacing your home after a disaster.
“Unfortunately, when an insurance company fails to honor their agreement with a homeowner, it can leave policyholders in the lurch. Being left to shoulder the financial burden of property damage is devastating,” Michigan law firm Ravid & Associates explained.
To help, we compiled four homeowners insurance facts that you should probably know in order to protect yourself from costs, lawsuits, and more. Let’s dive in!
This is one of the most important homeowners insurance facts to know. Many house buyers think that they are covered for any type of damage to their home, but this is simply not the case. There are actually a few damages you may be on the hook for paying if they happen.
For instance, most insurance policies state that the damage must be sudden and accidental. So if you have had an ongoing leak for years that has caused considerable floor damage, you homeowners insurance provider may not pay for the repairs. Flooding and earthquakes may also not be covered too. These are add-ons you may need to pay extra for, so ask if your home is in a flood or earthquake prone area.
Covered for hurricanes or tornadoes? You probably are, but depending on where you live, your deductible can be a percentage of your home’s value and not a flat rate deductible. For example, if you live in Miami, you may need to pay a 5 to 10 percent deductible of your home’s value after hurricane damage.
The amount of home maintenance you do on a regular basis can greatly affect your homeowners insurance claim. This seems silly, but it is important that homeowners insurance providers don’t always have your best interest in mind. In fact, if they can find a way not to pay for damages, they certainly will.
Not doing maintenance on your home regularly is a good scapegoat for insurance producers. If an insurance adjuster finds that lack of maintenance could have caused the damage, you could potentially not get your claim paid. For instance, if a tree falls on your house, but they believe it should have been cut down prior, they may find you liable and not pay you.
Yep, your family’s furry companion can have a direct effect on your policy. Homeowners insurance normally covers everyone in your household, and this includes your pet. However, some breeds are not covered by your policy. Did you know the average dog bite insurance claim is around $35,000?
Certain breeds are not allowed, or they will cost you more, like Boxers, Great Danes, Akitas, Pit Bulls, Rottweilers, Huskies, and more. If you have a homeowners insurance policy, but planning to make a dog addition to your family, it may be a good idea to discuss breeds with your policy providers.
Homeowners insurance is definitely great to have. It can be a real lifesaver if your home is damaged or destroyed due to a natural disaster. But for some damages, it may be cheaper in the long run to pay for the damages yourself and not make a claim. This sounds pretty odd, but you have to think of your insurance rates over time.
Like car insurance, if you get into an accident, whether it’s your fault or not, you may see a pretty large hike in insurance rates. The same goes for homeowners insurance after a claim is made. Why? Insurance companies go by the data that if a policy holder makes one claim, they are likely to make more in the future.
So to balance out cost, they charge you more after your first claim is made due to potential future risk. In fact, your rates could go up as much as nine percent after your first claim, according to CNN Money. A second claim can hike rates by 20 percent. Instead of filing a claim, do the math and consider the long-term costs.
There are certainly a lot of nuances when it comes to homeowners insurance. It’s critical that you understand your policy front to back in order to stay clear of unforeseen costs that will come out of your pocket. When in doubt, call your policy provider and ask as many questions as you can think of. It could save you tens of thousands of dollars.