If you’re reading this blog or looking for a home insurance quote, I know you’re probably asking yourself why not?  After all, the more coverage you have the higher the premium.  Let’s also not overlook the fact that most losses on an insured home are partial any way.  Why not just insure your home for the average loss amount for like kind loss exposure right?  Well no, because when you insure your home for less than its replacement cost you open yourself up to two possible loss scenarios, neither of which are any good.

The lessor of the two evils could occur on a loss where you originally and knowingly insured your home for less than 100% of its replacement cost but more than 79%.  If you did then chances are you would have been ineligible for a guaranteed replacement endorsement on the dwelling itself.  If that was the case, in the event of a total or almost total loss, your insurance company would only be obligated to pay out up to the actual amount of coverage you had at the time of the loss.  This could leave you holding the bag on hundreds even thousands of dollars’ worth of repairs.  

It only gets worst the lower you insure your home below its 80% calculated replacement cost.  In this case for any loss to your home, be it partial or total, the adjuster factors in something called a co-insurance provision before paying out a dime.  Essentially this equates to your out of pocket expense or deductible almost equaling the percentage of dwelling coverage that you’re under insured by.  That truly translates to thousands of dollars in self-insured expenses.  If you’re not sure where you stand we suggest contacting your current agent or use our directory to consult with those local professionals within your community.