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Man fixing the house

3 Common Home Insurance Mistakes to Avoid

Extreme weather events are becoming more common in many parts of the United States, putting countless lives and property at peril. If your home has taken significant damage, you will need to file a claim with your insurer. However, many homeowners make mistakes when filing insurance claims, which can result in a smaller reimbursement or even a claim rejection.

There are a few ways to deal with homeowner claims. Public adjusters help in negotiating with the insurance company and can result in a desirable payout. You can make life and the claims process easier for you, however, by doing (or not doing) a few simple things. Here are three common mistakes to avoid:

  1. Underinsuring your home

Getting an insurance plan that doesn’t cover the cost of rebuilding your house is the most common mistake you can make. According to research firm CoreLogic, up to two-thirds of homes are underinsured by an average of 20 percent. For a home that’s valued at $500,000, that’s $100,000 in missing coverage. With that kind of loss, you might not be able to rebuild a house equal to the one damaged or destroyed. The worst part: Many people don’t realize they’re underinsured until they file a claim.

What should you do?

Avoid plans that cover only the amount of the mortgage. At most, a mortgage may be worth 90 percent of the original value and even less if the property has appreciated. If possible, negotiate a plan that covers at least equal to the market value of your home. Some insurers also offer automatic inflation protection or extended replacement coverage.

insurance claims in a binder

  1. Accepting the insurance company’s estimate

Homeowner’s insurance claims are usually settled based on the insurance company’s calculation of the value of the damaged house. This can be devastating if your home is underinsured or valued according to its actual cash value. You might lose thousands of dollars due to depreciation and inadequate insurance coverage. Also, insurance companies commit errors all the time, which can result in decisions derived from inadequate or incomplete information.

What should you do?

Always assume that the insurer lowballed their calculations. Insurance companies, by their nature, do not want to give you the maximum settlement you deserve. Also, costs for repair and replacement wildly differ from county to county. Public adjusters of homeowner claims can assist you in assessing the real value of your losses, calculate the costs, and guide you through the process. They will also negotiate with the insurance company on your behalf.

  1. Failure to inform the insurance company immediately

Another common (and costly) mistake is failing to immediately inform the insurance company about a loss or damage to your home that could be covered by your policy. Waiting will only result in more losses.

What should you do?

Call the insurer right away! Homeowner’s claims are easier to process if the evidence and memories are still fresh. Also, many policies require timely notice. Failure to notify can result in a rejection.

A final word

You can avoid a lot of headaches when dealing with your insurer. Don’t forget to take photos and videos of your home immediately after the process and keep all e-mails and letters with your insurer. If possible, hire a public adjuster to process your claim. Doing these simple things will save you a lot of money down the line.

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