Your home is likely one of your biggest investments, but is it fully protected? Many homeowners assume their insurance policy has them covered for all possible scenarios—until disaster strikes and they find out otherwise. Understanding common coverage gaps can help you avoid unexpected financial burdens and ensure you have the right protection in place.

1. Flood Damage: Are You Covered?

A standard homeowners insurance policy does not cover flood damage. Many homeowners don’t realize they need a separate flood insurance policy until it’s too late.

Real-Life Scenario:
Sarah and James lived in a neighborhood that had never experienced severe flooding. However, after an unexpected heavy storm, their basement flooded, causing $40,000 in damage. Their homeowners insurance denied the claim, leaving them to pay out of pocket.

💡 Solution: If you live in a flood-prone area—or even if you don’t—consider purchasing flood insurance through the National Flood Insurance Program (NFIP) or a private insurer.

2. Replacement Cost vs. Actual Cash Value

When insuring your home and belongings, policies can either cover:
✔ Replacement Cost – Pays to replace damaged property at today’s market price.
✔ Actual Cash Value (ACV) – Pays what the item is worth today, factoring in depreciation.

Real-Life Scenario:
Tom’s roof was damaged in a windstorm. His policy covered the roof at actual cash value, meaning after depreciation, he only received half of the money needed for a new roof. He had to pay thousands out of pocket.

💡 Solution: Opt for replacement cost coverage to ensure you get enough money to replace damaged items without depreciation deductions.

3. Sewer Backup and Water Damage

A sewer backup or sump pump failure can cause significant damage, but many policies don’t include this coverage.

Real-Life Scenario:
Lisa came home from vacation to find her basement flooded due to a sewer backup. The damage cost $15,000 to repair, but her policy didn’t cover sewer backups. She had to foot the bill herself.

💡 Solution: Add sewer backup coverage to your policy to protect against these unexpected disasters.

4. Home Business Coverage: Are You Unintentionally Uninsured?

If you run a business from home, your homeowners insurance may not cover business-related property or liability claims.

Real-Life Scenario:
Jake operated an online retail business from his house. When a fire damaged his home, he discovered his inventory wasn’t covered because it was classified as business property. He lost thousands of dollars in merchandise.

💡 Solution: If you run a home-based business, consider home business insurance or an endorsement to ensure your business property is protected.

5. High-Value Items: Do You Need Extra Coverage?

Most standard policies limit coverage on jewelry, fine art, and collectibles. If you own expensive items, you may need additional coverage.

Real-Life Scenario:
Emma’s engagement ring was stolen, and her homeowners policy only covered $1,500—far less than its $8,000 value. She didn’t have a separate jewelry rider, so she had to cover the rest herself.

💡 Solution: Get a scheduled personal property endorsement for high-value items to ensure they’re fully covered.

Take Action: Review Your Policy Today

Many homeowners don’t realize their coverage gaps until it’s too late. Reviewing your policy before disaster strikes can save you from financial stress later.

🔹 Work with an independent insurance agent to identify gaps in your policy.
🔹 Update your coverage regularly to reflect home improvements and valuable purchases.
🔹 Consider specialized coverage like flood insurance, sewer backup, or home business protection.

We’re here to help you stay compliant with your state’s regulations and can assist in arranging coverage to transfer risks from your shoulders to a trusted insurance carrier.

If your liquid assets are over $3 million, we recommend a complimentary Private Client coverage review with UWIB Risk. This review is designed to ensure you’re fully protected, and it could offer valuable insights into your coverage needs.

Take advantage of this cost-free opportunity to safeguard your assets. Schedule your Private Client Review today!