Three Home Insurance Blunders That Could Be Financially Devasting

Homeowners should never underestimate the significance home insurance has for their financial security. Finding the right home insurance policy is about delving into the details so that you know what to expect when it comes time to file a claim.

Unfortunately, many homeowners don't put enough research into purchasing a policy and aren't aware of important details of their policy agreements. The following are three particularly common home insurance oversights that can cause homeowners to suffer unnecessary financial blows:

Assuming a policy includes flood coverage

In general, a home insurance policy will not include coverage for flood damage to a home. This may seem strange considering that flood damage is one of the most significant causes of property damage. However, flood coverage almost always requires a special addition to a home insurance policy or a separate policy altogether. 

Those who live in flood-prone areas are taking enormous risks if they don't have flood coverage. Homeowners can get national flood coverage with the National Flood Insurance Program, which is offered by the Federal Emergency Management Agency (FEMA).

Assuming a policy includes coverage for mold or sewage problems

Some home insurance policies don't offer coverage for damage caused by mold or sewer backup. Even if a policy does offer coverage for such damage, the policy might include claim limits that don't cover all of the resulting expenses. 

Buying mold insurance is unfortunately very expensive. Mold growth in a home can be extensive and difficult to eradicate. Homeowners need to assess whether mold is a significant risk where they live to determine if it's worthwhile to buy mold insurance. Those who live in very humid areas or whose homes are built with materials that are particularly susceptible to mold damage should seriously consider purchasing mold coverage. 

On the other hand, sewer backup coverage is usually not that expensive and can easily be added onto a policy. Adding this type of coverage is a good idea regardless of a homeowner's location. 

Assuming a policy has a flat deductible

When it comes to understanding the deductible on your home insurance policy, reading the fine print is very important. 

Many policies have deductibles that vary depending on the cause of damage. In particular, many policies will specify that the deductible will be a certain percentage of the damages in the case of a natural disaster such as a hurricane or earthquake.

When you're purchasing home insurance, you should ask the agent about varying deductibles. Ideally, you want a flat rate agreement that won't leave you having to cover a deductible you can't afford before you can even take advantage of the coverage you've been paying for. Talk to experts like Kerr Agency for more information.