You might assume you’re covered for repairs after a disaster because you have homeowners insurance. Unfortunately, you could be wrong.
As extreme weather becomes more frequent and destructive, homeowners across the country are discovering gaps in their insurance policies — after the damage has already been done. Insufficient coverage limits may leave them without enough money to rebuild. Exclusions may result in zero payout. In the aftermath of a catastrophe, too many face a second shock: finding out their insurance falls far short of what they need to recover.
Here’s how to audit your home insurance policy to make sure you’re covered before the disaster hits. You can log into your insurance portal or call your agent to request a copy of your policy’s declarations page and follow along.
Your coverage limits might be too low
One of your policy’s biggest vulnerabilities may be in your dwelling coverage limit, which caps how much your insurer will pay to rebuild the structure of your house. This is often listed as Coverage A in your policy documents. Ideally, this limit is set at the full cost to rebuild your home.
But this isn’t always the case. When estimating replacement cost, some insurance brokers may default toward the lower end of the spectrum to offer more competitive premiums, says Gannon Laidlaw, an independent insurance broker in Napa, California.
And sometimes buyers assume they can use the purchase price to estimate coverage limits. “Another thing to remember is the actual cost to rebuild isn’t the market value,” Laidlaw says. In fact, it can be more expensive to rebuild a home than to purchase one.
Even homeowners who started with enough coverage risk becoming underinsured over time as building costs rise. “More often than not, if they've had a policy for an extended period of time, that limit is probably going to be underinsuring their home,” Laidlaw says.
When Colorado’s 2021 Marshall Fire ripped through a suburban community where catastrophic wildfires were unheard of, researchers found that 74% of homeowners were underinsured. Over one-third were severely underinsured, meaning their limit covered less than 75% of the cost to rebuild, leaving someone with a $500,000 reconstruction bill, for example, at least $125,000 short.
To avoid this, review your policy annually by using a replacement cost calculator or asking your broker to run an updated estimate. For custom builds or major renovations, hiring a licensed reconstruction contractor will get you the most precise estimate.
Don’t forget your belongings
Beyond the structure of your home itself, make sure you have enough personal property coverage to replace your belongings as well.
For most insurers, this coverage limit will default to around 50% to 70% of your dwelling coverage limit, but you can add more if you need it.
Standard policies often pay actual cash value for your personal belongings, which accounts for loss of value over time. This could leave you getting pennies on the dollar for older furniture, clothes and electronics. If you want to be able to get brand-new replacements for your stuff, Rogan recommends upgrading to replacement cost coverage.
While you’re auditing your coverage, build a detailed home inventory of all your belongings so you have proof of everything you owned when filing a claim. You don’t want to have to rely on your memory for this, especially while you’re in the middle of a crisis.
You might not be covered for certain disasters
Certain natural disasters aren’t covered by homeowners insurance. These exclusions are typically listed in your full policy contract, which you can request online or by calling your agent. Flooding and earthquakes are excluded from standard policies, but you can buy supplemental coverage to fill these gaps.
The most common and devastating exclusion is flooding. Standard policies usually cover wind and hail damage, but they don’t cover flood damage caused by the heavy rainfall and surges that accompany storms. While mortgage lenders require flood insurance in federally designated flood zones, flooding rarely stays within these boundaries. About 40% of National Flood Insurance Program (NFIP) claims come from outside of high-risk zones, according to the Federal Emergency Management Agency (FEMA).
The gap between who needs flood insurance and who actually has it continues to widen, often with devastating consequences. When Hurricane Helene made landfall in 2024, extreme rainfall pushed hundreds of miles inland, reaching the mountainous regions of western North Carolina. Residents of Asheville and the surrounding county found their homes submerged — and fewer than 1% of housing units carried federal flood insurance.
Getting a standalone flood insurance policy through the NFIP or a private insurer is the best way to close this gap. You can look up your flood zone using flood maps from the Federal Emergency Management Agency (FEMA). You can also gauge your risk by searching your address in the online climate risk tool offered by First Street, which models climate hazards. But keep in mind that climate change is driving frequent and intense rainfall into new areas, so flood maps may not capture your full risk.
“It’s not necessarily about the flood maps,” says Emily Rogan, senior program officer for United Policyholders, a consumer advocacy group. “These days, the messaging is: If it can rain, it can flood.”
Make sure wind damage isn’t stripped from your policy as well. While standard homeowners insurance usually covers wind damage, insurers in hurricane-prone states sometimes exclude it entirely. If your policy has a windstorm exclusion, you’ll need to add windstorm insurance for coverage.
Even if your policy does cover wind damage, check the deductibles section of your policy declarations page. Many states allow insurers to charge a separate wind and hail deductible that’s a percentage of your dwelling coverage limit (often between 1% and 5%). If your home is insured for $400,000, a 5% wind and hail deductible means you’d have to pay $20,000 out of pocket before your coverage kicks in. If you have a wind and hail deductible, make sure it’s set to an amount you can afford.
Finally, anyone living in a high-risk area for ground movement should consider earthquake insurance, which can be added to your existing policy or purchased separately. California faces the highest risk, yet only about 1 in 10 residents have earthquake coverage. Other high-risk areas include Alaska, Hawaii, Oregon, Washington and a pocket surrounding Missouri’s New Madrid fault line that encompasses St. Louis and Memphis, Tennessee, according to maps from the U.S. Geological Survey (USGS).
Affordable add-ons that can fill the gaps
When a major disaster destroys hundreds of homes at once, a post-disaster surge in demand can cause local building costs to spike by 20% or more. When this happens, even carefully calculated coverage limits might fall short.
Adding extended replacement cost coverage expands your policy’s coverage limit by anywhere from 10% to 50%, providing a crucial buffer if rebuilding costs more than expected. It’s one of the most cost-effective coverage options, typically adding $30 to $150 per year to your insurance bill.
Extended replacement cost multiplies your coverage when you need it most. “If the worst-case scenario happens, more money kicks in,” Rogan says. She recommends buying as much as you can afford, or the maximum your insurance company offers. “If they offer 50% and you can afford it, it becomes well worth it.”
While reviewing your policy, check your ordinance or law coverage. Standard coverage only pays to rebuild your home to its original condition, but this add-on can help cover the cost to rebuild up to current building codes. Policies typically include a small amount, often around 10% of your dwelling coverage, but you should consider bumping that up if your home’s roof, windows, plumbing, insulation, wiring or HVAC system haven’t been updated in the past decade.
What to do if you can’t find coverage
Accessing policy add-ons and upgrades assumes you can qualify for standard home insurance in the first place, which is an increasing challenge for homeowners in high-risk areas. If private insurers decide your house is too risky to insure, your main option may be a Fair Access to Insurance Requirements (FAIR) plan that offers limited coverage.
If you find yourself on a FAIR plan, you can add a difference in conditions (DIC) policy to fill in some of those coverage gaps. “It's obtained separately, and you attach that on, or you combine those two policies, to really create what would be a traditional homeowners policy,” Laidlaw says.
Another alternative is surplus lines insurance, which covers high-risk properties and unique hazards. These policies come with fewer consumer protections, so you’ll want to talk to an agent about them only after you’ve been turned away by at least three other insurers.
Laidlaw encourages consumers to have realistic expectations when shopping for homeowners insurance. Insuring one of your most valuable assets requires some homework and regular follow-up. If you go into the process expecting it to be fast, cheap and easy, or thinking you can buy a policy once and never look at it again, you might not come out with adequate coverage.
“After a disaster, insurance is still the number one source of money that gets people home,” Rogan says. “The more you can understand about your insurance beforehand, the better you'll be able to use it afterwards.”
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