3 major home insurance mistakes to avoid

3 major home insurance mistakes to avoid

As of October 2020, the U.S. unemployment rate was 6.9%, according to the Bureau of Labor Statistics (BLS). In April 2020, the unemployment rate reached 14.7%, its highest level since the Great Depression. The Federal Reserve forecasts the unemployment rate will not improve significantly until 2021.

Due to COVID-19, unemployment has become one of the most critical economic issues facing the country. As a homeowner, you may be trying to find ways to save money. Revisiting your home insurance policy to make sure you’re getting the best deal and that your home is properly covered makes good sense.


Avoid these 3 home insurance mistakes

Your home is your largest financial investment. Yet it is vulnerable if left unprotected from theft and vandalism, fire, a natural disaster, injuries suffered while on the property, or some other mishap. Many people think things like this will never happen — until it does.

That’s why it’s important to visit Credible to explore your home insurance options and avoid these three main home insurance mistakes.

  1. Not having enough insurance coverage
  2. Not having the appropriate coverage in advance 
  3. Not having natural disaster insurance

1. Not having enough insurance coverage 

Underinsuring your home can be a costly mistake. Many homeowners only have enough coverage to cover their mortgage. But if your mortgage or the equity in your home is only worth 75% of your home’s value, you may only receive that amount if it’s destroyed. That may not cover rebuilding.

Likewise, you may have a policy that only covers the current value of your home. But, your home’s current value may not cover the actual cost to rebuild at today’s prices. That’s why it’s important to know what it will cost to rebuild and get coverage close to that amount.

This is also true concerning your personal belongings.

Comparing multiple insurance quotes can potentially save you hundreds of dollars per year. And, it’s so easy to get a free quote in minutes through Credible’s partners here.

Generally, there are two types of coverage—replacement cost and actual cash value.

  1. Replacement cost value. Unlike actual cash value insurance, when a tragedy happens, replacement cost insurance will replace your belongings at their current value.  For instance, if a fire damages your computer, and the cost to replace it today is $1,200, you are paid $1,200, even though you may have paid $1,000 two years ago.
  2. Actual cash value. Actual cash value insurance will reimburse you for the cash value of your personal belongings. However, your belongings are not worth as much as they were when you bought them because of depreciation, so you are paid the actual cash value at the time the tragedy occurs, not what you paid for them…Read more>>