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Three Mistakes homeowners make when insuring their home

1. Underinsuring one’s home
“When people buy insurance, they’re not thinking about the devastation. They’re penny wise and pound foolish sometimes. The hardest thing to get people to accept is the house cost. People say, ‘why am I insuring for more than what I’m paying for the house?’

“We do a reconstruction cost estimator. We have to determine the cost of replacing the dwelling in the event that it was a total loss. Unique features of a house a lot of times are not factored into the actual cost prior to the loss. For example, older structures have unique characteristics like using horsehair plaster. No one does that anymore. They use wallboard. But under the contract, the insurance company has to replace it with a similar value.

“Sometimes when people are shopping for insurance, they’re looking for the bottom line. You get what you pay for.”

2. Not buying flood insurance
We live in an area that floods so even if homeowners are not in the 100year flood plain, you still have the risk of flooding.  Damage from flood waters is some of the worst damage I see because the water is full of bacteria and any water damage material must be replaced. 

3. Failing to insure valuable items.
Most policies only insure up to $1,500 for jewelry, guns, fine art, silverware, musical instruments and collectibles.   Always let your insurance agent know if you have more than this amount so you can be fully insured on and off premises.    You can purchase worldwide coverage for jewelry ie rings and watches for a nomimal premium and a lot of times there is no deductible.   This is a special endorsement to your policy so be sure to consult your insurance agent.

One other feature to consider: Ordinance or Law coverage. When you rebuild, any new structure will have to comply with current building and zoning laws. Compliance with current regulations might result in additional costs -- and not all of those might be covered under the homeowner’s insurance. So when buying a homeowner’s policy, particularly if the house is older, check to find out whether ordinance and law coverage is included.

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