Tuesday, February 14, 2012

Home Insurance, Mistakes to Avoid

Although gathering home insurance quotes can be a slightly tedious affair, it is highly advisable to shop around before committing to a policy. As insurance companies are not government regulated there are many scam artists who will be reluctant to pay out if a claim is made. Sticking to well established companies or those who have been recommended by friends and family is the best option.

There are many mistakes that, when made, affect the price of a policy; this is why thorough planning is essential. Here are a few examples of common mistakes that people make when insuring their home:

  1. Not contacting an existing insurer – Many people will begin their search for quotes on comparative sites in order to reduce time. Although these types of search engines are useful, they also ignore a vital component. Combining home insurance with car, life or pet insurance with the same company can result in a substantial discount of up to 15%. Most providers will reward existing customers for their loyalty and should always be the first port of call.

  2. Paying unnecessary contents cover – As households change and tenants move on, so will the contents cover. Many people find themselves paying for coverage on expensive jewellery, electronic items and appliances that they no longer use or own. Keeping up to date and informing insurers of changes in circumstance is of great importance when attempting to keep payments low.

  3. Paying for unnecessary risks – Whilst some insurance companies will automatically include flood, earthquake and hurricane damage cover, others may provide this as an addition. It is important to check with the provider if this has been added automatically as those situated in areas of low risk will find themselves paying for unnecessary cover. However, those who live in an area of high risk should never remove this cover and include it as one of their necessities.

  4. Paying for damages – The majority of households who have home insurance choose to pay for minor breakages and damage to the home with their own money, even though they could make a claim. If this is occurring, it may be worth reducing the deductible on the policy. According to a recent survey of insurance rates, increasing the deductible from $2000 to $4000 on a homeowner’s insurance policy can save nearly $200 a year from a policy’s principle.

When households are in the process of purchasing their home insurance, it is important to thoroughly consider the type of coverage that is required well in advance. Additionally, in depth research is also essential to ensure that the best deal is obtained. Although this can be a lengthy process and deemed as an inconvenience, it is important to find the best policy to suit the needs of the whole household.

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