Skip to content

Insurance Services Group Blog

All You Ever Wanted to Know About Insurance

Protecting Your Home: Are You Underinsured?

Purchasing a home is one of the biggest financial decisions many people will ever make. When it comes to protecting your investment, it’s worth spending some extra time to make sure it’s properly protected.

Too often we hear stories of homeowners who simply didn’t look at all their insurance options, only to find themselves inadequately covered following a fire, windstorm, or other claim. In fact, more than half of all homes are NOT properly insured. According to insurance industry experts, the average U.S. home is underinsured by more than 20 percent.

Understanding Homeowner Insurance

Home insurance policies vary by carrier, available coverages, types of covered losses, and type of residence. When you’re considering what policy is right for you, it’s a good idea to talk with your agent about your needs. A significant discussion should be how a policy handles replacement cost verses actual cash value. Do you have the right valuation, amount of coverage and other endorsements to provide the cost it actually takes if a fire totally destroyed your home?  It’s important to review this every few years as some costs increase nearly seven-percent year after year due to the rising price of materials, energy, and labor. 

Protect What Matters to You

Before comparing costs between companies, compare the coverage offered by each option.  Think about your housing situation and the assets you want to protect. Ask yourself: “What do I want the insurance company to do if _________ happens?”  Apply this methodology to each of the following sections of a home policy.

  • Protection for Your Home - Property or Dwelling Coverage typically pays to repair or rebuild your home if it’s damaged or destroyed by an insured event like a fire, pipe breakage or windstorm.  Remember: Earthquake, Landslide and Flood are NOT covered unless specifically stated.
  • Protection for Your Stuff- Personal Property can be damaged or stolen. Consider what you own and how you want it protected. Replacement cost valuation is not automatic but highly recommended. If you have special possessions such as jewelry, art, antiques or collectibles you should talk to your agent about this additional coverage.
  • Additional Living Expenses - If you can’t live in your home because of a covered loss, your home insurance policy will pay additional living expenses (commonly up to 24 months) while your home is repaired or rebuilt.
  • Protection for You and Other People - Personal Liability Coverage applies if someone is injured or their property is damaged and you are to blame. The coverage generally applies anywhere in the world. When choosing your liability coverage limits, consider things like how much money you make and the assets you own. Your personal liability coverage should be high enough to protect your assets if you are sued.
  • Medical Coverage - This covers medical expenses for guests if they are injured on your property, and in certain cases covers people who are injured off of your property. It does not cover health care costs for you or other members of your household.

Our agents always advise homeowners of their options, discuss claims examples and make sure we set the policy so the right things happen following a claim. Finding ways to save money, especially in today’s economy matters, but buying home insurance shouldn’t be based on finding the lowest premium. Working with an independent agent who has access to multiple insurance carriers gives you the opportunity to compare policies, premiums, and prices side-by-side. It’s important to review your home policy every couple of years. This ensures you and your family have correct coverage should something happen to your home - and that’s what matters most.