Home Underinsured? What Not Having Enough Insurance Means For Homeowners

Why Your Home Needs to be Properly InsuredEveryone knows that home insurance is important for protecting their home along with everything and everyone in it. However, many homeowners don’t have enough insurance, and oftentimes, they don’t even know it. Being underinsured is risky for homeowners, and it’s estimated that approximately 66% of homes doesn’t have the insurance that it should. Homeowners need to understand how much insurance their home actually needs so they can protect it. Here is what homeowners who don’t have enough insurance risk and how they can  better protect their homes moving forward.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

The Risks of Being Underinsured

Most homeowners who are underinsured don’t even realize there’s a problem until it’s too late and their home has sustained damage from something. Not only does insurance effect how well their home is protected, but these are some of the other risks of being underinsured:

  • If the home is destroyed, the homeowner will only get the amount of money they were insured for, so if their $300,000 home was only insured for the minimum of $100,000, that’s all they will get
  • If the homeowner is sued, they can potentially lose their home
  • Some damages, such as floods, aren’t included in the base insurance
  • The things inside the home may not be covered

No one wants their home to sustain damage from an intense storm and then call their insurance provider only to discover that the insurance will only cover part of the damages. Homeowners who want to avoid situations like these will want to make sure that their home is completely insured.

Making Sure a Home Isn’t Underinsured

It seems like it will be difficult to decide if a home has the proper amount of insurance or not. After all, there are so many factors that go into deciding which plans to use. Here are some tips for getting the right amount of insurance for a home:

  • Have an independent insurance agent help estimate the replacement cost of the home
  • Never go with just the minimum liability coverage; try to buy at least $300,000
  • Make sure to add flood, earthquake, or deferred maintenance insurance if desired because these are typically not covered by basic packages
  • Request additional living expense (ALE) coverage to help while waiting for the home to be rebuilt if it is ever destroyed
  • Always update the insurance policy when making big renovations or additions to a home

Countless people discover too late that their home didn’t have enough insurance and are left to foot the bill on their own. 

Adding Protection to a Home

If a homeowner suspects that their home doesn’t have enough insurance or want to update their policy, it’s easy to do so. If the homeowner has an insurance agent with whom they work and consult when handling their insurance each year, they should first contact that agent and explain the situation. Having a trustworthy insurance agent to consult can be a great way to get the best, most-personalized insurance policy for a home. However, for those who have yet to find an agent or just want to quickly add extra insurance to their policy, most insurance providers will allow homeowners to do it on their website.

Insurance is the best and easiest way to protect a home from disaster, general damage, or even theft. All homeowners should be confident that their home and everything in it is protected, and it’s always worth double-checking a policy to make sure that the coverage is what it should be.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

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