Common Mistakes When Purchasing Homeowners Insurance on Martha’s Vineyard

In the realm of insurance, particularly for high net worth coastal homeowners, knowing what to prioritize is essential, but equally crucial is understanding what pitfalls to avoid when seeking coverage to safeguard your coastal abode and loved ones.

1. Price-Centric Decisions: While it's instinctive to focus on price, delving into the details of your homeowners insurance is paramount. Ensure that a seemingly "cheap" policy doesn't sacrifice critical coverage. Just as you wouldn't purchase an incomplete item, secure the comprehensive coverage your Martha’s Vineyard home truly needs.

2. Mismatched Policy for Occupancy: Homes serve diverse purposes – your family’s primary home, a secondary vacation home, or even income generation through rentals. The occupancy dictates the type of policy required. A policy for homeowners living in their residence differs from those renting out their property or leaving it unoccupied. A mismatch could lead to claim denials, emphasizing the importance of adjusting your policy with changing occupancy.

3. Policy Exclusions, Oh My!: Navigating the current coastal property insurance market conditions requires heightened awareness of insurance policy exclusions. Gone are the days of assuming the existence of "full coverage" or "all risk" policies. It is imperative to delve into the intricacies of coverage exclusions, recognizing that a homeowner's policy serves to protect against disasters, not as a warranty plan. In light of these market changes, take a deliberate pause to reassess your policy's coverage scope and exclusions. Understanding the finer details at a comprehensive level is essential to ensure that your home and assets are adequately protected. Dispel any lingering assumptions about universal coverage and proactively review the nuanced terms of your policy in the context of current market dynamics.

4. Flood Insurance Misconceptions: Homeowners insurance doesn't cover floods. Flood insurance, protecting against storm surges and flooding during severe weather, requires a separate policy. Plan ahead, as often times there is a 30-day mandated waiting period before flood coverage becomes effective.

5. Value Your Home Appropriately: The insurance value of your home is based on the cost to rebuild, which is very high on Martha's Vineyard. This value does not take into account the market or real estate value of your home. It's always better to little bit too high in coverage than a little bit too low. Most clients try to avoid the lender placed insurance. 

6. Actual Cash Value vs. Replacement Cost Value: The actual cash value of an item is calculated as the Replacement Cost Value, less a depreciate factor based on the item lost, equals the Actual Cash Value. Your building should always be on Replacement Cost Value. Your contents coverage may or may not be depending on your needs. Remember coverage that offers 25%, 50%, or guaranteed replacement cost requires that your home insurance have a limit of coverage equal to or greater than the home as valued at the time off by the insurance company. 

7. Reducing Coverage to Lower the Price: Rather than reducing coverage to lower premiums, consider maintaining robust coverage while raising your deductible. This approach balances lower premiums with comprehensive protection, ensuring financial security in the face of significant losses.

8. Assuming Coverage for Others' Property: If renting out your home, understand that your landlord policy won't cover tenants' personal property losses. Tenants need their own renter's policy to safeguard their belongings and liability.

9. Seeking Professional Guidance: Insurance complexities demand professional assistance. Licensed agents possess in-depth knowledge and ongoing education, guiding you through critical details. They can compare coverage and prices across various companies, preventing pitfalls that may arise when navigating coverage independently.