3 coverage gaps to know

Key Points:

• Many homeowners in the U.S. are underinsured, with over 70% of insured California homeowners underinsured by about 20%, leaving them financially vulnerable to damages from natural disasters like wildfires, hurricanes, and floods.
• Standard homeowners insurance policies often exclude or limit coverage for flooding, requiring separate flood insurance, yet less than 4% of U.S. households have purchased flood policies despite flooding being the most common and costly natural disaster.
• Rising rebuilding costs and labor expenses have outpaced typical insurance coverage, causing many homeowners to underestimate the funds needed to fully rebuild their homes after damage.
• Insurance policies frequently cap payouts for valuable personal items such as artwork, collectibles, and jewelry, making it necessary for homeowners to purchase additional coverage for these possessions.
• Experts urge homeowners to review and update their insurance coverage to address gaps, especially ahead of disaster seasons, and consider add-ons like extended replacement cost and ordinance or law coverage to better protect their assets.