Avoiding Common Mistakes as a First-Time Homebuyer

The most common mistake of which I'm aware is folks not understanding what insurance is for or what it covers. So they think they are covered for Claims, Losses or Occurrences that they aren't, or they are covered and don't think to seek claims. Deductibles can be a good example. A deductible is an amount of money that you and the Insurer agree you will cover before the Insurer pays out any money — e.g., if you had a $100 deductible and suffered a $500 Loss, you would pay $100 of the Loss, and the Insurer would pay the remaining $400. Obviously, if you have a lower deductible, you can expect to pay a higher premium. But often, a person obtains insurance to cover big Claims or Losses, not regular or routine. If your $500 TV gets accidentally knocked over, typically, you'll just go buy another TV rather than think to make an insurance claim. So if your deductible is less than $500 (or some other perhaps higher amount under which you will just handle it rather than think to involve your Insurer), then you are likely paying higher premiums for a deductible you really aren't using.

So, to summarize, misunderstanding what insurance you have and why you have it is, in my experience, a common first-timer mistake.