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 data compiled by Clever, the average homeowner spends $3,000 a year just on maintenance and repairs. 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. Others are surprised to learn that the costs of rebuilding their home after a catastrophe have little to do with what their home would be worth if they sold it.
Homeowners insurance is based on your home’s replacement cost, not its market value, and many factors affect replacement cost. Labor shortages and higher costs for construction materials continue to drive replacement costs sky high, putting many homes at risk of being underinsured. Review your coverage annually with your insurance broker or agent to make sure your home is insured for the right amount.
Mistake No. 2: Not Understanding Your Policy
Do you know what’s covered by your policy and what isn’t?
Many personal items, such as jewelry, artwork, guns, and rare collectibles, 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 agent as many questions as necessary until you’re sure you understand what your policy covers and for how much. Your agent will advise you of any special riders you should consider adding to fill in coverage gaps.
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 is an invaluable tool that can protect you from catastrophes, but if you make small claims over and over, your insurance company will either raise your rates (because you’re a risk to insure) or drop you entirely.
If that happens, you’ll have difficulty getting affordable insurance elsewhere because other insurance companies can see your claim history for up to seven years. That’s why it’s important to weigh the pros and cons when deciding whether to file a claim or pay out-of-pocket. Your insurance partner can provide guidance if you’re unsure about a specific claim.
Mistake No. 5: Not Notifying Your Insurer About “Life Changes”
Getting married or divorced? Expanding your family? 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
After you file a claim, your insurer will ask for documentation of the items you lost (including the date purchased and make and model) to determine their value.
Create a home inventory and gather this information now so you can get a more accurate payout for a future claim. Cataloging your possessions may sound like a daunting process, but you’ll appreciate the investment if you need to replace your belongings. You can store the information in a home inventory app or in the cloud for safekeeping.
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.
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 vent 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 and the exterior of your home every few months. (Drones are great for this if you, a friend or a neighbor has one.) You’ll spot small problems earlier.
Here’s what you’re looking for:
- Curling, cracked or missing asphalt shingles
- Shiny, black granules in your gutters and flowerbeds
- Clogged gutters or downspouts (a common cause of roof leaks, water damage and mold growth)
- Stained, discolored or deteriorating siding
- Water pooling near the foundation
- Sagging roof sections
- Mold or mildew growth between shingles
Mistake No. 10: Skipping Routine Maintenance
You can avoid many expensive repairs by setting reminders to complete key maintenance tasks on a regular basis, such as:
- Scheduling an annual furnace tune-up
- Changing HVAC system filters two or three times a year (more frequently if you have pets that shed)
- Replacing the batteries in carbon monoxide sensors and smoke alarms (and checking the expiration date on fire extinguishers) once every year
- Checking the attic for mold or mildew after heavy storms
Make sure everyone in your household knows where the following valves and systems are located and how to turn them off in an emergency:
- Electrical panel/circuit breakers
- Main water shut-off valve
- Gas line shut-off valve
- Washing machine, toilet, or other separate plumbing fixture shut-off valves (if applicable)
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.