Are You Underinsured?

Understanding Insurance Coverage Gaps

A coverage gap occurs when your insurance policy limits are lower than the actual value of your belongings. If disaster strikes, you'd have to pay the difference out of pocket.

Common Causes of Underinsurance

• Outdated policies — Coverage hasn't been updated as you've acquired more belongings
• Underestimating value — Most people don't realize how much their stuff is worth
• Default coverage levels — Policy defaults often aren't enough
• Price increases — Replacement costs rise over time

How to Close Your Coverage Gap

1. Create a home inventory — Know exactly what you own and its value
2. Contact your insurance agent — Ask about increasing your personal property coverage
3. Consider replacement cost coverage — Pays to replace items new, not depreciated value
4. Schedule high-value items — Jewelry, art, and collectibles may need separate coverage
5. Review annually — Update coverage after major purchases or life changes

What About the Deductible?

Remember that you'll pay your deductible before insurance kicks in. If you have a $1,000 deductible and suffer a $10,000 loss, insurance pays $9,000 and you pay $1,000. When calculating your needs, account for this out-of-pocket expense.