How to Tell If Your Home Is Underinsured

Home insurance can be a critical safety net, but many homeowners don’t realize they may be underinsured until it’s too late. Underinsurance means your policy wouldn’t cover the full cost to rebuild or repair your home after a disaster.

Tips to Tell If Your Home Is Underinsured

The following tips can help you tell if your home might be underinsured:

• Outdated coverage limits—If you haven’t reviewed your policy in several years, your coverage may not reflect current construction costs. Inflation, labor shortages and material price increases can significantly raise rebuilding expenses.

• Home improvements not reported—Have you renovated your kitchen, added a deck or finished your basement? If you didn’t inform your insurer, your policy might not cover the added value.

• Market value vs. replacement cost—Some homeowners confuse market value with replacement cost. Insurance should be based on what it would cost to rebuild your home, not what it could sell for.

• Lack of extended or guaranteed replacement coverage—Standard policies may cap payouts. Extended or guaranteed replacement cost coverage offers a buffer if rebuilding costs exceed your policy limit.

• Inadequate personal property coverage—If you’ve acquired expensive electronics, jewelry or art, your personal property limits may be too low. A home inventory can help assess this.

• Local building code changes—If codes have changed since your home was built, you may need additional coverage (ordinance or law coverage) to meet new standards during repairs.

Learn More

Contact Guffin & Eleam Inc to review your homeowners insurance. Ask about replacement cost estimates, update your home inventory and consider endorsements for high-value items.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.