What are the biggest gaps in a typical homeowner’s policy?
Written by Andy Kruger
BuildSOS CEO4 min read
The short answer
The most common, costly gaps are: a high wind or hurricane deductible you didn’t know about, flood exclusion (almost universal on standard policies), a dwelling limit that hasn’t kept pace with rebuild costs, and missing code-upgrade coverage. Each one can turn a covered loss into a five- or six-figure surprise.
This is general information, not legal or financial advice. Check your state Department of Insurance or consult a professional for guidance specific to your situation.
The red flags checklist
- Wind and hurricane deductible. Hurricane deductibles are usually 1% to 5% of your home’s insured value. Know the actual dollar figure, not just the percentage.
- Flood exclusion. Most policies don’t cover flood at all. This requires a separate policy, typically through the National Flood Insurance Program.
- Wildfire exclusions or limits, if you’re in a fire-prone region. Coverage availability and terms vary significantly by state and insurer.
- Replacement cost vs. actual cash value. These sound similar but the financial difference on a total loss can be tens of thousands of dollars.
- Mold and sewer backup exclusions. Often excluded or capped at a low limit.
- Code upgrade coverage. Rebuilding to current code can cost more than your original structure. This coverage is often missing entirely unless added separately.
- The underinsurance gap. About 64% of U.S. homes are underinsured, by an average of 27% (CoreLogic), meaning the dwelling limit on the policy hasn’t kept pace with actual construction costs.
Frequently asked
How do I check for these in my own policy?
Read your declarations page for deductibles and limits, then the exclusions section for what’s not covered. If anything is unclear, ask your agent directly, or try Policy AIDvisor for a plain-language read.
What’s the single most common surprise?
The wind or hurricane deductible catches the most people off guard, since it’s often expressed as a percentage rather than a dollar figure, which makes it easy to underestimate.
How do I fix an underinsurance gap?
Talk to your agent about raising your dwelling coverage to match current local rebuild costs, which typically rise faster than people expect.
Sources
About the author
Andy Kruger
Andy Kruger is CEO of BuildSOS, author of When the Storm Comes, and sits on multiple boards and advisory groups shaping disaster resilience policy and research.
About Andy