Are You Fully Covered? Many Homeowners Think They Are – But They’re Not.
Your home is likely your biggest investment, but is your insurance policy keeping up with its true value? Many homeowners unknowingly carry inadequate coverage, leaving them vulnerable in case of catastrophe. After every major disaster, stories about insurance denials and issues with coverage seem almost inevitable as a result. Here’s how you can make sure you and your home are protected.

The Hidden Risks of Being Underinsured
You might assume that your insurance policy will cover all damages in the event of natural disasters, such as earthquakes or fires, or other destructive events. Unfortunately, that’s not always the case. These are the most common reasons why homeowners end up underinsured:
1. Rising Construction Costs
The cost of labor and materials fluctuates, and many homeowners’ policies don’t account for inflation or market changes. If your home needs to be rebuilt today, the cost may be significantly higher than when you first took out your policy. It is highly recommended that you review your “Coverage A: Dwelling Replacement Cost” coverage with your insurance agent each year.
No one expects to experience a total loss of their home, but the risk of being underinsured here is too high. Hurricanes, floods, wildfires and more have all contributed to huge losses of property, and insurance carriers expect this trend to continue. It is incumbent on all insurance agents to fully inform their clients and review their policies with them at minimum once per year to ensure that these policies are written correctly and have the correct coverage.
2. Outdated Policy Limits
Many policies are set based on the original purchase price or a past estimate, rather than the current replacement cost. Without regular reviews, your policy may not reflect today’s real cost to rebuild your home. For example, many homeowners never consider increasing their coverage after a remodel or an addition. If you’ve had any upgrades to your home since you originally bought the house, ensure that these changes are discussed with your insurance agent so that they can properly account for them on your policy. This will ensure you are always insured properly for your updates and improvements.
3. Natural Disasters and Exclusions
Standard home insurance policies often exclude certain disasters, such as floods or earthquakes. If you live in a high-risk area and don’t have additional coverage, you could face devastating out-of-pocket costs. Insurance companies know this, and sometimes they may avoid giving you the most comprehensive coverage to secure a cheaper policy. Believe it or not, some carriers even offer an “Actual Cash Value” valuation for roofs, where repair cost is calculated after depreciation. Since roofs significantly depreciate over time, this means that your roof will be written with much less coverage than would be necessary to replace it in a total loss situation. Read our blog about the difference between Actual Cash Value and Replacement Cost for structures and personal property to learn how you can make sure your assets are adequately insured.
4. Home Improvements and Upgrades
If you’ve renovated your home—adding a new kitchen, finishing a basement, or upgrading fixtures—but haven’t updated your insurance policy, you may not have enough coverage to fully replace these improvements in case of loss. Have you added a skylight? Pool? A balcony over your garage? What about a built-in bookshelf? Have you replaced your old wooden fence with a modern vinyl or metal fence instead? All of these will have an impact on your replacement cost valuation. If these are not accounted for in your policy, you may not have enough coverage when catastrophe strikes.
5. Personal Property Gaps
Homeowners insurance includes personal property coverage, but standard limits may not cover high-value items like jewelry, electronics, firearms or collectibles like silverware or fine china. If you haven’t done a recent inventory, you might be underinsured on your belongings as well.
How to Ensure You’re Fully Protected
✅ Get a Replacement Cost Estimate
Work with your insurance provider to get an updated estimate of your home’s replacement cost based on current construction prices.
✅ Consider Inflation Protection
Look for policies that include inflation guard coverage, which automatically adjusts your coverage amount based on rising costs.
✅ Review and Update Your Policy Regularly
Annual policy reviews ensure that your coverage keeps up with renovations, new belongings, and changing market conditions.
✅ Consider Additional Coverage
If you live in an area prone to floods, earthquakes, or hurricanes, explore supplemental policies that provide protection beyond standard coverage.
✅ Take an Updated Home Inventory
Document your belongings with photos and receipts to ensure your personal property coverage reflects their full value.
Protect Your Biggest Investment Today
Being underinsured can be a costly mistake, but it’s one you can easily avoid. By reviewing your coverage regularly, understanding your policy limits, and working with a knowledgeable insurance partner, you can ensure your home is fully protected against unexpected disasters.
At ArcLight Insurance, we specialize in helping homeowners assess their coverage needs and find the right policy for total peace of mind. Contact us today for a free home insurance review and make sure you have the protection you deserve.