ORR Blog

21
May-2021

Mistakes homeowners make when buying insurance & how to avoid them

Eager new home buyers can sometimes leave homeowners insurance to the last minute in the excitement of buying their first home or buying their next forever home. However, leaving insurance to last minute is an easy way to be underinsured.

Start from the ground up. When buying a homeowners insurance policy, you are going to insure your house to its full reconstruction cost. This is very different from the market value of a home. The cost of labour and materials can be significantly higher than the market value. Alternatively, if you live in an area with high market values, you could be paying for more coverage than required.

Next, we need to talk about water. Is your homeowner’s policy going to protect you from the many ways water can cause damage? Speaking with your insurance broker about additional water coverages is very important. Many people believe the basic water coverage included in a homeowner’s policy is enough. When in reality, it only will cover things like burst pipes. Adding extra water coverage will protect you from those heavy rainfalls, rapid snow melt or a sump pump failure.

Now that you are settled into your new home and are unpacking all your personal belongings, take a step back and try to evaluate how much it would cost to replace everything. An inventory list and photos can make this a little easier. Many people will come to me and say “I don’t have that much and it would not cost me much to replace it all.” This is a common overlooked area of coverage. Although you may feel that you do not own very much or it’s not expensive to replace, the cost of every daily item is constantly increasing. We, as your brokers want to ensure that in the event of a loss, you have enough coverage to replace EVERYTHING and get back to an enjoyable life.

Talk to your insurance broker today to go through your homeowner’s policy and confirm you are completely protected.

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