Homeowner’s insurance helps people protect what is usually their greatest investment against fire, theft and natural disaster, but what happens when homeowners experience a gap in their coverage? United Services Automobile Association notes that while many Americans hold a policy and believe they understand it, some may have undiscovered gaps that could cost them plenty of money out of pocket in case of a disaster.
Those with homeowner’s insurance may want to take the time to review their policies and learn about a few common gaps that exist, as well as what they can do to reduce or eliminate them.
Deductible gaps
There are several different types of deductibles homeowners can choose when they create a policy, and the two most common are percentage and fixed dollar deductibles. The former may change as the value of your home changes while the other remains the same, no matter the value of a home. Because percentage deductibles can fluctuate, gaps may exist when homeowners do not realize the value of their home, as its actual worth may not equal what it may cost to rebuild in case of a total loss.
Loss of use gap
Most homeowners want to save money on their insurance policies; however, this could result in a gap that does not cover the expense of having to live elsewhere if the damaged home is no longer safe. Loss of use coverage provides for a variety of costs, including pet care and boarding, as well as rent on another dwelling or hotel.
Homeowner’s insurance typically covers damage caused by many weather-related disasters, such as hurricanes. Those who live in areas where such events happen often may want to review their policies to ensure they reduce or close coverage gaps.
