Your Home Insurance May Cover Less Than You Think. What San Diego and Chicago Owners Should Check Before a Claim

Your policy may not cover what you think it does. According to Realtor.com, many homeowners have gaps in their coverage that only show up after they file a claim. Those gaps can leave an owner paying thousands of dollars themselves.

We see the same thing in our own transactions. Insurance gets attention for a few days during escrow, when the lender asks for proof of coverage. Then nobody looks at it for years, even as the home, the cost of rebuilding it, and the local risks all change.

San Diego: fire risk, rebuild costs and finding coverage. In much of San Diego County, the first question is whether a carrier will write a policy at all. Several major insurers have pulled back from new California business. Some owners in higher fire-risk areas have ended up on the California FAIR Plan with a second policy added on top. That setup can work, but owners need to read both documents closely. They should also check that the dwelling limit covers what it would cost to rebuild the home today, not what the home was worth when they bought it. Construction costs have gone up, and a limit set five years ago may not be enough.

Chicago: water is the quiet risk. In Chicagoland, the expensive surprise is more often water than fire. Basements often flood and sewers back up after heavy storms, and sewer backup coverage is often sold as an add-on rather than included in a standard policy. Owners with finished basements should check whether they have that add-on and how much it pays. Condo owners in the city should also compare their own policy with the association's master policy, so they know where the building's coverage stops and theirs begins.

Buyers: get quotes early. We encourage clients to request insurance quotes during the inspection period, not the week before closing. A quote can change whether a property makes sense. It's far better to learn a home is hard to insure while your contingencies are still in place than after they expire. It's also worth asking the seller for the home's claims history.

Sellers: a home that's easy to insure attracts more buyers. A roof with a documented age, updated electrical and plumbing, and cleared defensible space around a San Diego home near a canyon all make a property easier to insure. That brings in more potential buyers.

The best time to read your policy is before you need it. If you want help understanding how insurance affects a purchase or sale, our team is glad to talk it through and can connect you with trusted local insurance professionals.