How to Avoid Underinsuring Your Home

Published in All Insurance Industry Insights on Monday, December 1, 2025 by Tammy Baish-Acuff

Your home is one of your biggest investments, and making sure it is properly insured is essential. Many homeowners are surprised to learn that most homes in the United States are underinsured. In fact, nearly two out of three homes do not have enough coverage to rebuild after a loss. The good news is that a few smart steps can help you make sure your policy gives you the protection you need.

Review Your Dwelling Coverage

Dwelling coverage should be based on what it would cost to rebuild your home today, not what your home would sell for. Construction costs, labor, and materials have all increased in recent years. Make sure your limits reflect those changes. If you remodel or add new features, update your coverage. It can also help to get a professional estimate of your home’s rebuild value.

Include Detached Structures

Do not forget about other structures like garages, fences, or sheds. They need their own protection. Make sure your policy limit for detached structures is enough to rebuild them if they are damaged or destroyed.

Protect What’s Inside

Your belongings are just as important as the structure itself. Check your personal property coverage to be sure it reflects the true value of what you own. Replacement cost coverage is usually the best option because it pays for a new item rather than the depreciated value. Keep a detailed list of your belongings and include photos. Special items such as jewelry or artwork may need their own coverage.

Plan for Temporary Living Expenses

If your home becomes unlivable after a covered loss, loss of use coverage helps pay for temporary housing and other living expenses. Most policies provide about 20 percent of your home’s insured value for this coverage, but check to make sure that is enough for your situation.

Review Your Liability Limits

Liability coverage protects you if someone gets hurt on your property or if you accidentally damage someone else’s property. Standard policies often include $100,000 in liability coverage, but you may need more if you have things like a pool, trampoline, or pets. You can also consider an umbrella policy for additional protection.

Understand What Is Not Covered

Standard homeowners policies do not usually include flood or earthquake coverage. If you live in an area that faces these risks, ask about adding specialized protection.

At PDCM, we are here to help you make sure your home is properly protected and your coverage fits your needs. Reach out to Tammy at 319-296-7021 or tacuff@pdcm.com to review your policy and learn more about your options.

Written by
Tammy Baish-Acuff