A coverage gap is what happens when there’s a disparity between insured losses (damages that are covered under an insurance policy), and uninsured losses, which are paid for out-of-pocket by individuals affected by a catastrophe or other event.
Clearly, we all can do a better job of insuring our homes and businesses — and this job starts with having the right information.
Here are some important things to consider:
- Covered vs. Not Covered: Homeowners, renters, and business owners should look at all insurance policy documents to learn what is and what isn’t covered. Knowing the risks is what insurance is all about.
- Ongoing Reviews: Businesses and households also should review insurance policy coverages annually at a minimum to be sure there’s no gap between insured and uninsured losses.
- Rebuild vs. Rebuy: Purchase the type and amounts of coverage adequate to rebuild a home or business, and not just to “rebuy” it (ignore the “Zillow Zestimate”). The latter refers to a property’s market value, so it’s important to know a property’s insured value.