One of the most important decisions in our life is to choose the home in which we are going to live for a time – or our whole life – from that moment on it becomes the most precious asset. In it are our hopes and efforts, and that is why we must protect it in the event of an accident. So insuring it becomes a very important issue and many times we do not pay the necessary attention when purchasing home insurance.
Another email with the same problem. This week there are a few subscribers who have raised a similar issue and the origin of everything is in contracting home insurance with deficiencies.
Today we can find very good information on the web on any subject, insurance too. For example, this site, which aims to be a benchmark among consumers. Despite this, when purchasing home insurance, we continue to make the same mistakes, possibly for trying to lower the price of the policy.
I like to keep what I have, what about you?
Well, if you pay a little attention, in this post we are going to review the most common mistakes when purchasing home insurance so that you do not have problems if you suffer an incident in your home.
1. Not reading the particular insurance conditions
Due to lack of time, desire, or because we trust whoever sells us the insurance, we do not read the policy when it arrives. If we have hired it online, we keep the headlines and the price. If it’s the bank, how can we not trust whoever takes care of our money? And if it is the friendly mediator, an “if you already know I have it” is enough.
In fact, you will surely archive it and you will not review it again until you have a mishap and at that moment if it has an error in the wording, you will not be able to do anything if more than 30 days have passed since you hired it.
Falling into this error is easy, so you should read the policy when you have it in your possession. Take a moment to review some very important aspects such as the description of the insured risk, the capital contracted, or that coverage where there is a greater probability of having a claim.
With this, you will avoid anger and subsequent problems, in addition, you have a month from your purchasing for the company to correct those aspects that do not fit your insurance proposal.
2. Value the continent at purchase value
It is common, especially when the insurance is associated with a mortgage, to insure the home for the amount of the loan. The price you pay includes the building and the plot or the proportional part if it is flat. Insuring the value of the land is a mistake that is going to cost you money. The insurer, in the event of a claim, will compensate you for the reconstruction of the house on the same site.
Insuring above what the insured property is worth is throwing away money.
But the reverse circumstance also occurs, and it is common to insure the continent for a lower value to save on the price. By doing so, you may incur underinsurance and in the event of a claim, the compensation will be reduced in the same proportion as the uninsured capital.
Most insurers try to correct these errors by using guidance scales, based on the square footage of the home, the quality of construction, and the construction site.
Many companies already verify, when purchasing home insurance, the meters of the house through an online consultation with the Cadastre.
If you live in a residential building, check your community insurance to see its coverages.
3. Assess the assets in the home by eye
Have you ever stopped to think about how much everything you have at home is worth? Well, when purchasing home insurance you have to establish the capital that you want to insure for content.
A few years ago, to test a program that I had created to carry out inventories, I began to do my math. To my surprise, the library, the vinyl and CDs, and four paintings amounted to more than 1/3 of the capital that I had contracted in the insurance. I needed to include furniture, appliances and electronics, trousseau, clothing, kitchenware, jewelry, etc.
With this, I want to tell you that before subscribing to the insurance, you are interested in spending a good time evaluating everything you have at home. Take an inventory, breaking down those objects that have a special value such as works of art or jewelry. That way you can see if these objects exceed the limits imposed by the insurer in the contract.
An incorrect valuation of the goods can cause you to fall, as happens with the continent, in over insurance (you pay more) or in underinsurance (you charge less)
If you don’t know how to determine the value of your assets, enlist the help of a professional, an independent and objective expert.
4. Think that with purchasing a home insurance everything that happens is covered
Based on what was said in the first mistake, not knowing what the insurance covers often makes us think that everything that happens at home is covered. At the outset, I tell you no, and in the best case – with a household risk – neither.
Insurers for competition and marketing reasons have been including a multitude of “filler” covers. This may make us think that everything is covered, but they continue to exclude everything that smells like home maintenance.
You have to be very clear about what the insurance covers and whatnot, you will avoid later inconveniences or say that of…
Why do I pay for insurance if it doesn’t cover anything? Insurers are very ready to collect, but when it’s time to pay…!
5. That doesn’t happen to me
This is one of the most common mistakes.
There are many incidents where we think that it is impossible to happen at our house. According to the reports, a fire breaks out in a home every three minutes thirty-seven seconds. Every fourteen there is a leak and every 25 a glass breaks. You know, Murphy’s Law is wicked and can be enforced anytime, anywhere.
Do not underestimate what can happen in your home and less for saving four euros by eliminating coverage or hiding certain assets from the insurer. If you have doubts, I recommend that you read What guarantees do I need in my home insurance
6. Forgetting to review insurance periodically
If we do well with home insurance, we forget we have it. We only worry when we have an incident and then it is too late.
In the same way that your life changes, so does your house. You adapt it to your needs, acquiring new elements, or modifying existing ones. It will also depend on the economic period, whether the house is worth more or less. All these factors advise reviewing the insurance conditions every two or three years.
The incorporation of prevention or security measures, the use of the Internet of Things (IoT), can lead to a reduction in the price of insurance. Any variation in this regard or if they aggravate the risk, you should notify the insurer as soon as possible.
7. Compare the price of your insurance with that of the neighbor
This is possibly the most pernicious mistake of all. We tend to compare and equal ourselves and in insurance, the same thing happens.
Why is my insurance more expensive than the neighbor’s, when the houses are the same?
Possibly you are overlooking the reforms you have made, that the furniture is not from Ikea, or that the neighbor is more fearful and has installed bars and an alarm.
There are many factors that determine the price when purchasing home insurance. Any difference in risk, capital, or coverage means that you pay a different price. Also, think that you contract within the framework of the free market, so each insurer sets the price according to its economic sufficiency.
These are the most common mistakes when purchasing home insurance. To avoid them, you should spend a little time on it, analyze what the market offers you before deciding.
An insurance policy is an adhesion contract. When you subscribe you are accepting the conditions imposed by the insurer. They establish what are the coverage, limits, and exclusions that will govern the contract. If the nature of the property or the fact that has caused the damage does not match the conditions of the policy, the incident will not be covered.
So when purchasing home insurance, you have to be clear that the policy must be expertly tailored by … an expert. This rules out doing it through comparators, telemarketers, brothers-in-law who make insurance to get a few euros, consultancies, or banks.
And you, do you want to take the risk?
Do you have an expert to advise you not to make these mistakes?