Buying homeowners insurance isn’t just about checking a box at closing or renewing your policy each year. Your home is likely your largest investment, and having the right coverage can make all the difference when the unexpected happens.
Unfortunately, many Wisconsin homeowners discover gaps in their coverage only after filing a claim. Here are five of the most common mistakes—and how to avoid them.
1. Insuring Your Home for Market Value Instead of Replacement Cost
One of the biggest misconceptions is that your home should be insured for what it’s worth on the real estate market. In reality, market value and replacement cost are two very different numbers.
Market value includes factors like:
- Location
- School district
- Lot size
- Local housing demand
Replacement cost is the estimated amount it would take to rebuild your home today using similar materials and labor after a covered loss.
For example, a home that sells for $375,000 may cost $500,000 or more to rebuild due to today’s construction costs. On the other hand, some rural homes may have a market value lower than what it would cost to reconstruct them.
Review your home’s replacement cost regularly with your insurance agent to help ensure your coverage keeps pace with changing building costs.
2. Choosing the Wrong Deductible
Your deductible is the amount you pay before your insurance coverage begins after a covered claim.
Many homeowners choose the lowest deductible because it feels safer, while others choose a very high deductible simply to reduce their premium. Neither choice is automatically the best.
Ask yourself:
- Could you comfortably pay a $1,000 deductible?
- What about $2,500?
- Would a larger deductible create financial stress after a storm or fire?
A higher deductible can reduce your annual premium, but it should still be an amount you could realistically afford if you had to file a claim tomorrow.
Finding the right balance between savings and financial comfort is key.
3. Skipping Sewer and Water Backup Coverage
One of the most overlooked coverages is sewer and water backup protection.
Many homeowners assume water damage is always covered. Unfortunately, that’s not the case.
A backed-up sewer line or failed sump pump can cause thousands—or even tens of thousands—of dollars in damage to flooring, drywall, furniture, and personal belongings.
Without this optional endorsement, many of these losses may not be covered under a standard homeowners policy.
If your home has:
- A basement
- A sump pump
- Finished lower-level living space
- Older sewer lines
this coverage is well worth discussing with your insurance agent.
4. Forgetting to Update Your Policy After Home Improvements
Have you remodeled your kitchen?
Finished your basement?
Added a deck, garage, or home office?
Installed custom cabinetry or upgraded flooring?
Many homeowners invest thousands of dollars improving their homes but never update their insurance policy.
If your home’s value or replacement cost has increased because of renovations, your coverage may no longer be adequate.
It’s a good idea to contact your insurance agent anytime you complete major improvements so your policy reflects the current value of your home.
5. Overlooking Service Line Coverage
Most people don’t realize they may be responsible for underground utility lines running from the street to their home.
These service lines can include:
- Water lines
- Sewer lines
- Electrical lines
- Natural gas lines
- Communication lines
If one of these lines fails due to wear, tree roots, corrosion, or other covered causes, repairs can cost several thousand dollars.
Service Line Coverage is an affordable endorsement offered by many insurance companies that can help pay for excavation and repairs, reducing unexpected out-of-pocket expenses.
Review Your Coverage Before You Need It
The best time to find a gap in your homeowners insurance is before you have a claim—not after.
A quick policy review can help ensure your home is protected for today’s rebuilding costs and that important coverages such as sewer backup and service line protection are included when appropriate.
Insurance isn’t one-size-fits-all. Your home, your budget, and your family’s needs are unique, and your coverage should reflect that.
Need a Home Insurance Review?
Whether you’ve recently purchased a home, completed renovations, or simply haven’t reviewed your policy in a few years, now is a great time to take another look.
Our office is happy to provide a complimentary homeowners insurance review. We’ll explain your current coverage, identify any potential gaps, and answer your questions so you can feel confident that your home is protected.
This article is intended for general informational purposes. Coverage varies by insurance company and policy. Always review your specific policy and consult with your insurance professional regarding your individual coverage needs.
