It’s dangerous to make assumptions with home insurance, and yet people do it constantly. They assume that the policy they have is enough to repair or replace their home. This gives them peace of mind and a sense of safety. If something like a natural disaster or a fire occurs, they believe they have plenty of coverage to take care of it.
But what if that assumption is wrong? A lot of people are underinsured without even realizing it. This could mean that the only time when you find out that you don’t have adequate coverage is when you try to use that policy to make these repairs. You’re paying for insurance every year, so you need to make sure that you actually have enough insurance to give you the type of service that you’re expecting.
2 ways that you could be underinsured
In a general sense, being underinsured simply means that your policy won’t give you enough coverage. It’s just not sufficient for what you actually need.
One way that this happens is when you have purchased insufficient coverage from the start. Maybe the policy has an overall cap for rebuilding the home or making repairs. But what if your home is actually worth more than that cap? If a fire or a flood destroys it entirely, the insurance policy may pay out just as intended. But, that might not mean that you can actually rebuild your home with the money, leaving you in a very tough position.
Sometimes, issues also arise when people have the wrong coverage or they don’t have a certain type of coverage that they need. Maybe you have general home insurance. Did you know that this probably doesn’t include flood insurance? It usually doesn’t. But many people will only discover this when there’s a flood and then they try to get the insurance company to pay to replace their home. Without the right policy, you are out of luck.
The impact of changing costs
Another thing to consider is that, because of supply chain issues, inflation and rising transportation costs, building costs have been going up dramatically. Your insurance could simply be out of date.
Say, for example, that you bought your home five years ago and your insurance policy was calculated based on the building costs at that time. If those costs have doubled in 2023 and you haven’t updated your policy – something only 30% of homeowners have done – then it may no longer be sufficient. You didn’t make a mistake initially, but failing to update the policy changes things.
Tips to get the coverage you need
It’s important to have adequate insurance coverage in Frisco, Texas, so here are some tips that can help:
- Research how costs have changed over the years and compare them to what your insurance provides.
- Be honest when considering your insurance needs, and don’t always seek the lowest-cost policy.
- Think about specific areas, such as art collections or jewelry, where you may need additional coverage.
- Consider improvements you may have made to your property, such as home renovations or adding outbuildings.
Additionally, it simply helps to renew your coverage and analyze it on an annual basis. Here at Frisco Insurance, we’re an independent insurance agency, so we work with many different insurance companies. We are not going to try to sell you a specific policy. We will work with you to look at all the options you have and find one that really fits your situation. Call us now to get started.