Don't Make These Home Insurance Mistakes

14 December 2015

Robin Wells

Homeowners' insurance is a deceptively tricky form of insurance. You may think it's as simple as comparing rates and buying coverage, but you need to do more than that to protect your home fully. Here are three mistakes you can easily make if you aren't careful:

Using Your Coverage as a Maintenance Tool

You have the right to file an insurance claim every time you experience a catastrophe. However, when you incur a manageable loss, it's wise to evaluate whether you need to make a claim or use your pocket to fix it. This is because making numerous claims, even small ones, has the potential of raising your insurance premiums.

For one, it makes you look like a risky customer. Also, the insurance company has a process to follow every time you submit a claim, even a small one. It has to send an adjuster to handle your claim, and there is also the issue of associated paperwork. So even if it only pays out a token, the process of settling it is expensive. Make too many of these and your carrier will be spending considerable money on you, and it may have to raise your rates to cover the increased expenses.

Buying a House without Seeing the Owner's CLUE Report

The Comprehensive Loss Underwriting Exchange (CLUE) report details a homeowner's history of losses. Insurers use it to gauge the risk of future claims. When buying a house, it's wise to ask for the owner's CLUE report and scrutinize it. Use the information to know what kind of damages the house has experienced in the past.

This is important because prior claims may point to future issues. For example, you can use it to know how well the house has been maintained. If the owner has made multiple burglary claims in the past, it may mean that there is something about the house that attracts thieves. It may be that its security setup is inadequate.

Not Buying the Minimum Coverage

Purchasing the barest insurance coverage is a mistake. This is especially true for liability coverage, which protects you in case someone gets injured on your property. Buying the legally accepted minimum may not adequately cover your liability risk. Sit down with an insurance agent, evaluate your risk, and buy adequate coverage.

Even for other forms of coverage, you need to evaluate your risks and upgrade your limits appropriately. Consider that insurers place sub-limits on specific items, which may not be adequate if you have expensive items. For example, the sub-limit for home electronics may be good enough for "standard" homes, but it may be inadequate if you own the latest home cinema gear.

When deciding on homeowners' insurance, consider a company such as Olympic Northwest Insurance.

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