Owning a home can be complicated. You have to maintain it, repair it, pay for it, insure it and maybe even renovate it.
It can also get expensive. According to Bankrate, the average homeowner spends $2,000 a year on maintenance alone. Add in a lawn service, homeowners association dues, security monitoring, trash removal, cleaning service, taxes, insurance, and, of course, the mortgage, and that roof over your head is costing a bundle.
Avoid these common homeowners mistakes to make sure your home doesn’t cost you more than it should.
Homeowners Mistakes: Insurance
Mistake No. 1: Being Underinsured
Many homeowners underestimate what their personal belongings are worth. Many also don’t understand the costs to rebuild their home in the event of a fire or other catastrophe. (Construction costs have little to do with the assessed value of your home, or what your home would be worth if you sold it.) You and your insurance broker/agent should review your insurance annually to make sure you have the right amount.
Mistake No. 2: Not Understanding Your Policy
Do you know what’s covered and what isn’t? Many personal items, such as jewelry, artwork, guns, rare collectibles, and other items aren’t protected in a standard policy. Even though your home is nowhere near a body of water, you still may need flood insurance. (According to the Insurance Information Institute, 25% of all flood losses occur in low-risk areas.) Mold and sewer back-ups aren’t covered in standard policies, either. Ask your insurance broker/agent lots of questions until you’re sure you know what’s covered and for how much.
Mistake No. 3: Choosing the Wrong Deductible
The deductible, which is the amount you pay before your insurance company does when filing a claim, can be $250, $1,000 or some other amount. Set it too low, and you’ll pay increased premiums every year. Set it too high, and you may have difficulty covering the out-of-pocket amount when making a claim.
Mistake No. 4: Making Small Claims
Insurance should protect you from catastrophes. Period. If you make small claims over and over, your insurance company will either raise your rates (because you’re a bad risk) or drop you entirely. If that happens, you’ll have difficulty getting affordable insurance elsewhere. If you have, say, a $500 deductible, it’s better to pay out-of-pocket than file a claim for $800 (to get a $300 reimbursement).
Mistake No. 5: Not Notifying Your Insurer About “Life Changes”
Getting married or divorced? Putting in a swimming pool, getting a dog, finishing your basement, or inviting adult children to move back home? Make sure your insurer knows. Many “life changes” won’t affect your rates (though some will), but not telling your insurer can delay a claim and cause other problems.
Mistake No. 6: Not Inventorying Your Possessions
Take photos, shoot videos, photograph receipts, make lists. In the event of a loss, you’ll need to remember everything and give your insurer an idea of its value. For safety’s sake, store that information off-site or in the cloud.
Mistake No. 7: Not Bundling Policies
Many insurance companies offer savings if you have multiple policies through them. If you have homeowners insurance, vehicle insurance, life insurance and other coverages through multiple companies, ask your broker/agent what you can save by having all of your policies with one company.
Or maybe you didn’t know your insurance company offered a wide range of policies.
What to do instead: If you have insurance policies from different carriers, check with your agents. Ask what kinds of discounts they’ll give you for bundling all of your insurance policies with their company, if that’s possible.
Homeowners Maintenance Mistakes
Mistake No. 8: Ignoring the Little Things
A running toilet, a dryer that takes longer to dry, or a sagging gutter is a small problem. But when your water bill skyrockets, a dryer fire occurs, or a roof leak develops, that tiny annoyance has just become a big, expensive problem. Cleaning the lint out of a dryer event is much easier than rebuilding after a fire. Nearly 3,000 dryer fires are reported every year, costing some $35 million in property losses and an estimated five deaths, according to the U.S Fire Administration (USFA).
Mistake No. 9: Skipping Inspections
Take a close look at your roof every few months. (Drones are great for this if you, a friend or a neighbor has one.) Spend an hour walking around your house, and look at every door and window, your siding, your outdoor spigots and everything else. You’ll spot small problems earlier.
Mistake No. 10: Skipping Routine Maintenance
Have your furnace inspected, and get a tune-up every year. Change filters and batteries regularly; dirty filters cost money and make your HVAC system work harder.
Owning a home can be a rewarding experience. These tips will help you avoid common homeowners mistakes, save money and make it even more rewarding.