Many homeowners have a big insurance coverage gap
Many consumers have a gap in their homeowners insurance coverage. This puts them at financial risk, and they are unaware, experts said.
TL;DR
- Most homeowners are underinsured and unaware of the coverage gaps in their policies.
- Underinsurance leaves homeowners financially exposed to damage from increasingly frequent or costly natural disasters.
- Typical homeowners policies exclude or limit coverage for specific disasters like floods, earthquakes, and landslides.
- Rebuilding costs have significantly increased, often exceeding policy limits.
- Insurers also place limits on payouts for specific valuable items.
- Consumers often misunderstand their policies due to complex language and exclusions.
- Flood damage requires separate insurance, as it's typically excluded from standard homeowners policies.
- Add-on coverages like 'extended replacement cost' and 'ordinance or law coverage' can help address underinsurance.
- Coverage gaps are usually discovered only at the time of a claim, which is too late for proactive measures.