October 17, 2025

When was the last time you reviewed your home insurance policy? Many homeowners assume that once they’ve purchased coverage, they’re fully protected — but that’s not always the case. Being underinsured can leave you financially vulnerable if disaster strikes, and it’s more common than you might think. Here’s how to know if you’re underinsured and what you can do to make sure your home is properly covered.

What Does It Mean to Be Underinsured?

Being underinsured means your home insurance coverage isn’t enough to rebuild or repair your property after a loss. It could also mean your personal belongings, liability protection, or additional structures like garages and fences aren’t fully covered. Even if you’ve been paying your premiums on time, your policy might not reflect your home’s current value or replacement cost.

Common Reasons Homeowners Become Underinsured

Many homeowners discover they’re underinsured only after filing an insurance claim. Here are some of the most common reasons it happens:

1. Home Improvements: If you’ve remodeled your kitchen, added a deck, or finished a basement, those upgrades increase your home’s value — but your coverage might not have been updated to reflect that.
2. Inflation: Building materials and labor costs rise over time. If your policy was written years ago, your replacement cost coverage may no longer be accurate.
3. Personal Property Growth: As you buy new furniture, electronics, and valuables, your possessions may exceed your policy’s personal property limits.
4. Incorrect Replacement Cost Estimates: Some policies are based on market value rather than what it would actually cost to rebuild your home.
5. Coverage Gaps: Many policies have exclusions for things like flood or sewer backup damage, leaving homeowners responsible for those repairs out of pocket.

How to Know If You’re Underinsured

Here are a few signs your property insurance coverage might not be keeping up with your needs:

• Your policy hasn’t been reviewed in more than a year.
• You’ve completed home renovations or upgrades recently.
• You’re unsure what your current coverage limits are.
• You wouldn’t be able to rebuild your home for the amount listed in your policy.
• You haven’t discussed inflation or cost-of-living increases with your insurance agent.

If any of these sound familiar, it’s time for a home insurance review.

How to Increase Your Home Insurance Coverage

Staying properly insured doesn’t necessarily mean paying dramatically higher premiums. Here’s what you can do:

1. Request a Coverage Review: Schedule an annual review with your insurance agent to assess your home insurance limits and ensure they match current rebuilding costs.
2. Update After Renovations: Always inform your insurance provider after making improvements that affect your home’s value.
3. Consider Extended Replacement Cost Coverage: This type of policy provides additional funds above your dwelling limit if rebuilding costs exceed your estimate.
4. Add Endorsements for Valuable Items: Jewelry, art, and collectibles may need separate coverage to be fully protected.
5. Review Liability Protection: Make sure your liability coverage is high enough to protect your assets in case of an accident or injury on your property.

Why It Matters

Insurance isn’t just about compliance — it’s about peace of mind. When you’re properly covered, you can recover from unexpected losses without worrying about financial strain. A simple conversation with your insurance agent today could save you thousands in the future.