Home buying can be scary!
We’ve all heard horror stories of unwitting home buyers whose dream of owning a house turns into a nightmare because of a few poor decisions. If you or someone you know is considering purchasing a home, be sure to avoid these scary mistakes home buyers make:
1. Not using an independent insurance agent. A lot of well-known insurance providers are “captive,” meaning they are only allowed to offer clients insurance for one company (theirs!). Captive insurance agencies have limited choices available, and if the home buyer does not meet their criteria, their premiums (and consequently mortgage payments) can be substantially higher than a comparable policy elsewhere. Additionally, with captive agencies, the home buyer has less coverage options and restricted flexibility with underwriting requirements.
Independent agents, on the other hand, can shop your insurance rates among many carriers and get multiple quotes. Because there are more options available, home buyers can get a customized policy to fit their needs and typically at a fraction of the cost. Home buyers who want superior protection while saving time, money, and energy should always shop home insurance with a reputable independent insurance agent.
2. Focusing only on the coverage amount. Many home buyers only give attention to the amount of coverage on the primary house and attached structures (i.e. Coverage A, also called Dwelling Amount) and neglect being informed on what terms and conditions apply to that limit. Of course, the amounts of coverage on your home insurance will need to be sufficient, but coverage options are equally important.
For example, it is almost always more beneficial to have $285,000 of dwelling coverage on an “open perils” policy than a “named perils” policy with limits of $290,000. While one policy has a higher dollar limit, the other policy has broader coverage. Always inquire about the choices you have to customize your policy.
3. Asking the wrong questions. While it is prudent for home buyers to have a budget in mind, many times the only question clients ask the insurance agent is “How much does it cost?”
Of course, premium is important but it is unwise to save $10 on monthly premium only to be out-of-pocket $10,000 for an uncovered claim!
To keep from only focusing on “saving money” and purchasing an inferior policy, always ask questions such as:
- Is this policy a cash value or replacement cost policy?
- Is this policy named perils or open perils?
- What is the deductible?
- What are the wind and water coverages?
Picking home insurance doesn’t have to feel like a choice between a “trick or treat.” At Goosehead Insurance, we take away frustration and fear by helping you avoid these scary mistakes and providing you with ultimate peace of mind and protection.
Justin Winstead, Agency Owner, Goosehead Insurance