Most homeowners know how important home insurance is—but few truly understand all the details of their coverage. Not knowing these details can be costly.

1. Gaps in Coverage

Many homeowners have policies that fail to cover certain types of damage. For instance, flooding isn’t covered by standard insurance policies, yet floods are one of the most common natural disasters. According to, from 2014 to 2018, 40% of the National Flood Insurance Program’s claims were for policyholders who lived outside of high-risk flood areas. While overflowing rivers can lead to flooding, so too can hurricanes, snowmelt, and drainage problems. Homeowners should review their policy with their agent to determine if they are covered for flood damage and if there are any other gaps in their coverage that should be addressed.

2. Failing to Update

Major kitchen and bathroom renovations can increase the value of a home, but they also increase the replacement costs of a home. If you haven’t reviewed your policy in a few years, read through it to make sure all home upgrades are included, and call your agent if you need to make updates. Including these upgrades might cost more in monthly premiums, but it can save thousands if disaster ever strikes.

3. Underinsured
Homeowners insurance coverage should be equivalent to the replacement cost of a home—not the sale price of a home. Inflation has led to higher costs for construction materials and labor over the past few years; if your coverage hasn’t been updated recently, you might be underinsured. Homeowners who are underinsured can find themselves unable to financially afford to rebuild their homes in the event of a fire or flood. Research local building costs and check with your insurance company to make sure you are fully covered.

Your home is one of your most important assets, so it’s important to be protected. If you’re not sure that your homeowners insurance policy is adequate, then it’s time for a review.







This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.