top of page

Why Underinsurance Can Be Devastating for Homeowners and How Madelia Can Help

Updated: Sep 12, 2023

When disaster strikes, having adequate insurance coverage is crucial to rebuilding and getting your life back on track. However, many homeowners find themselves underinsured, which can be devastating in the event of a major loss. In this post, we'll discuss the risks of underinsurance and how Madelia's accurate replacement and construction estimates can help protect you before disaster strikes.

A report estimates that in 2021, nearly 15 million homes across America were impacted by severe natural disasters. The disasters caused an estimated $56.92 billion in property damage. CoreLogic, a global property data company, published its 2021 CoreLogic Climate Change Catastrophe Report which analyzed over 120 million residential structures across the country. The results showed that about 1 in 10 U.S. residential properties were impacted by natural disasters last year.

Understanding Underinsurance

Underinsurance occurs when the value of your insurance coverage is less than the cost to rebuild or repair your home. It can occur for various reasons, such as inflation, outdated insurance policies, inaccurate insurance estimates, or simply a lack of knowledge on the part of the homeowner to upkeep and maintain the proper policy amount.

Another reason it occurs, is that many homeowners seek the lowest possible insurance premium when obtaining coverage for their property, which is often required to secure a mortgage. However, simply obtaining insurance coverage doesn't necessarily mean that you are 'covered' in the event of a loss. It's important to keep in mind that insurance policies vary widely in terms of coverage and exclusions, so it's crucial to carefully review your policy and make sure that you have adequate coverage for your specific needs. Don't be caught off guard by unexpected exclusions or coverage limits when it comes time to file a claim.

The Risks of Underinsurance

Being underinsured can leave homeowners vulnerable to financial devastation in the event of a major loss. If your insurance coverage falls short of the cost to rebuild, you may have to pay the difference out of pocket. This can be a major financial burden, especially if you've already lost your home and belongings. Additional challenges occur when debating the cost of reconstruction with the insurance company. During these times, construction companies are busy and typically flooded with estimate requests.

How Madelia Can Help

Our accurate and detailed replacement estimates are based on local pricing from our trusted network of reliable and reputable contractors. Reputation and quality matter, there are too many stories of contractors under bidding, over committing and unable to perform. Owners are often forced to in this direction when they are underinsured and dont have the funds available to use higher quality subcontractors and general contractors, who tend to cost more money because of their overhead, which when dealing with construction, is crucial to the success of a project, as contractors can quickly be overwhelmed with invoices, bids, changes, etc.

Some examples of why we price using local quality subcontractors and GC's when establishing a replacement price, as these are the team members you want rebuilding your home, providing the support that you need and quality that you expect.

· "California Wildfires: Rebuilding efforts face delays and scams" from CBS News, about how some homeowners were scammed by bad contractors after the Tubbs and other wildfires in 2017:

· "Beware of Fire Rebuild Scams" from the Santa Barbara Independent, about how some homeowners were scammed by bad contractors after the Thomas Fire in 2017:

· "California Wildfires: Rebuilding Amid the Ashes" from NBC News, about how some homeowners were scammed by bad contractors after the Woolsey Fire in 2018:

· "Beware of Contractors After Northern California Fires" from U.S. News & World Report, about how some homeowners were scammed by bad contractors after the Kincade Fire in 2019:

It’s also important to consider the differences in building a new home today versus a home built in the past. Building codes, styles, products, and costs have all evolved. From our experience building homes after wildfires, Madelia takes these factors into account to ensure that your estimate reflects the true replacement value of your home.

Underinsurance is a major risk for homeowners, but it's one that can be mitigated with the right insurance coverage and accurate replacement and construction estimates. By working with Madelia, homeowners can have the peace of mind of knowing that they have the coverage they need to protect themselves and their loved ones.

Don’t risk underinsurance and added financial stress in the event of a loss. Trust Madelia to provide you with a reliable and accurate estimate of the replacement value of your home.



bottom of page