A Real Estate Broker’s Perspective on Common Home Insurance Pratfalls

As a real estate broker working with homebuyers and homeowners, there are a few mistakes I see on a regular basis when it comes to home insurance.

These oversights can cause a lot of unnecessary financial pain and strife in the course of owning a home.

In no particular order, here are three pieces of advice I have for consumers when it comes to home insurance…

Ask Yourself What Could Go Wrong and Go from There

Most people seem to realize that home insurance policies come with an assortment of riders and all coverages are not the same.

After all, if they were, there would probably be little, if any, price discrepancies between policies.

Which is why it’s amazing how many people will simply call up any home insurance provider (internet based or otherwise), ask for a number, and try to do a comparison solely off of that number.

I understand this stuff is not terribly exciting and you may not want to do a line-by-line comparison all the way through.

At the very least, I would suggest imagining everything – or most – thing that could go wrong with your house and finding out if you are covered.

For example, are all of your upgrades covered?

Are all of your possessions covered?

Are you covered for all types of natural disasters?

Etc, etc, etc.

Or will you need additional riders for certain items?

For example, in Maryland, condo insurance covers a specific level of replacement.

If you’ve updated – or are buying a unit – with pricy upgrades, a simple rider could prevent you from not being made whole if something were to happen.

In my experience, a great question an insurance agent is “what questions should I be asking that I’m not?”

If an “insurance professional” – or phone operator – is willing to provide you a number without offering any additional info, I’d be a bit skeptical.

Read Your Policy

This goes hand-in-hand with number one.

In the Rockville area, the median single-family home price is around $600,000.

For most people, it’s one of, if not THE most expensive asset they will ever own.

Don’t you think it’s worth a few minutes to understand how you are/aren’t protected when something goes wrong?

Note how I did not say “if” something goes wrong; I said “when” something goes wrong.

Find me someone who has owned a home for 10 or 20 years that at some point has not had to at least consider making a home insurance claim.

I imagine that would be quite difficult.

Keep It Local

I get it.

Those online quotes and fancy social media ads can be awfully enticing…especially when the numbers can look so much better than the ones you might get from a local broker or agent.

Here’s the thing…that person taking your order (if it’s even a person) doesn’t have any skin in the game.

And that’s fine so long as you never need to ask a question or possibly make a claim.

But when you need to make a claim (and again, you almost definitely will), what will your recourse be when said cheap company doesn’t answer the phone…or refuses to pay out….or isn’t in business anymore, etc., etc., etc.

Any service professional (insurance provider, real estate agent, financial planner, etc.) who has been around for a while will tell you that reputation is of extreme importance.

If he/she doesn’t service you properly and/or provides bad info/advice, it shouldn’t take very long for word to get out in the community.

I would never feel comfortable putting something as importance as insurance in the hands of a nameless/faceless agent on the phone.

And this is coming from someone who loves using and taking advantage of technology to its fullest.