It is without question that the purchase of a home is the largest investment most people will ever make in their lives; and most homeowners—especially in disaster prone areas—will hardly question whether or not to insure their home. In other words, as quick as we are to dismiss insurance at the rental car counter that’s how willing we are to accept it when signing the papers to our new homes.

And while protecting our homes against damage, natural disasters and other calamities is a real “no brainer” for most of us, this does not excuse us to not use our brains when we are deciding on a policy. There are many options and levels of coverage out there and we should not let our natural instinct to protect what is ours blind us from reason and lead us into making poor decisions.

One of the biggest mistakes is to over-insure your home. For instance, it seems logical that if you bought your home for $220,000 you should insure it for $220,000. Wrong. Even if a tornado picks up your home and throws it clear to Canada you still have the property it sat on. This lot does have value and can be sold; that being said, the $220,000 you paid includes the home as well as this land. Don’t insure both by paying $220,000—have an appraiser come out to give you the value of your home by itself so you don’t end up overpaying!

Additionally, you should (as always) read your policy very carefully. Insurance companies—especially with first-time buyers—know that you are in such a vulnerable position after undertaking the exiting, but ever daunting investment of a home that you’re willing to take on anything that will make you feel more secure. Make sure the policy does not contain spurious coverage like additional life insurance and landscaping insurance.

And while we have been discussing the ways in which we should not be overprotective of our big baby of an investment, realize that your policy should not just insure the value of your home. Your insurance should cover not only the replacement value(what it actually costs to build a home of comparable size), but the valuables inside as well as the expenses of living elsewhere while it’s being built.

Homeowners insurance is a must. However, you need to know where to be protective and where to trim the fat.

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