Are you confident your home insurance will actually cover a rebuild after disaster strikes?
Or would you end up hundreds of thousands of dollars short, like so many others in Johns Creek?
Most homeowners think they’re adequately covered. In reality, many are underinsured by $100,000, $200,000, or more. When that gap reveals itself, it’s too late. In this article, you’ll learn how to identify the 10 most common signs you're underinsured, and what steps to take to fix it.
We’ll cover:
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How to tell if your dwelling coverage is dangerously outdated
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What flood zones and high-value belongings mean for your policy
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How to add overlooked coverage like umbrella or home business protection
The Real Cost of Being Underinsured: A Local Story
David and Lisa bought their dream home in St. Ives in 2018 for $650,000. Their agent told them $500,000 in dwelling coverage was “plenty.”
Then in 2023, a kitchen fire destroyed half their home. Rebuilding cost $720,000.
Their insurance policy paid out $500,000. David and Lisa had to come up with the remaining $220,000, draining retirement savings and taking out loans. "We thought we had great insurance," Lisa said. "We never imagined we'd be underinsured by that much."
They are not alone. Johns Creek families face this every year. Home values have soared. Construction costs have spiked. Most homeowners haven’t updated their policies.
10 Warning Signs You’re Underinsured
1. Your Dwelling Coverage Hasn’t Increased in 3 or More Years
Construction costs have jumped 30 to 50 percent since 2020. If your dwelling limit hasn’t changed, it’s dangerously outdated.
What to check: Has your coverage increased at least 30 percent since 2020?
Local cost updates:
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Older homes: $175 to $225 per square foot (up from $125 to $150)
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Newer homes: $200 to $250 per square foot
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Luxury homes: $250 to $350 per square foot
Action: Ask your agent to recalculate your replacement cost based on today’s building prices.
2. Your Coverage Is Based on Market Value, Not Replacement Cost
Market value is not the same as rebuild cost. Market value includes land and location. Insurance only covers the cost to rebuild the structure.
What to check: Ask your agent whether coverage was based on replacement cost or market value.
Action: Get a replacement cost estimate using a professional tool.
3. You Have “Guaranteed Replacement Cost” That’s Capped
Many think this means unlimited coverage. It doesn’t. Most policies cap this at 120 to 150 percent of your dwelling coverage.
What to check: Is your cap 120, 125, or 150 percent? Even 150 percent might not be enough if your base limit is too low.
Action: Increase base coverage so the cap fully covers a rebuild.
4. Your Personal Property Coverage Is Only 50 Percent of Dwelling Coverage
Your belongings add up fast. From furniture to jewelry, your total value may far exceed 50 percent of your dwelling limit.
What to check: Take a video inventory and add up replacement values.
Action: Increase personal property coverage to 70 to 100 percent of dwelling coverage. Add scheduled endorsements for high-value items.
5. You Don’t Have Flood Insurance but Live Near the Chattahoochee
Flooding isn’t limited to FEMA zones. Twenty-five percent of flood claims occur outside designated flood areas.
What to check: Are you near Rivermont, Newtown, or Abbotts Bridge? Even heavy rain can cause damage.
Action: Get a flood insurance quote. It’s typically $400 to $2,000 per year depending on location.
6. Your Liability Coverage Is Below $300,000
In a high-income area like Johns Creek, liability risks are higher. Think medical bills, car accidents, or property damage lawsuits.
What to check: Are your home and auto liability limits at least $300,000?
Action: Increase coverage to $500,000 or add a $1 to $2 million umbrella policy.
7. You Don’t Have Umbrella Insurance but Should
If your home is worth $500,000 or more, or your income exceeds $100,000, you have assets at risk.
Cost: Only $200 to $400 per year for $1 to $2 million in added protection.
Action: Get umbrella coverage if you have income, equity, a pool, teen drivers, or rental properties.
8. You Have a Pool, Trampoline, or Dog Without a Liability Endorsement
These features increase risk. Many policies limit or exclude coverage unless endorsed.
What to check: Ask your agent if these are fully covered and whether exclusions apply.
Action: Add liability endorsements and increase limits or add umbrella coverage.
9. You Work from Home Without Business Coverage
Home insurance does not cover business equipment or liability. If your home office is damaged or a client is injured, you’re exposed.
What’s not covered: Computers, business liability, income loss, or client injuries
Action: Add a home business endorsement or a Business Owner’s Policy.
10. You Haven’t Reviewed Your Policy in Over Three Years
Your life changes. Your coverage should, too.
Ask yourself: Have you remodeled, bought valuables, added drivers, or started a business?
Action: Schedule an annual policy review at minimum.
What Being Underinsured Really Costs
House Fire Example
Coverage: $500,000
Rebuild Cost: $650,000
Out-of-pocket: $150,000
Personal Property Loss
Coverage: $300,000
Belongings Value: $425,000
Out-of-pocket: $125,000
Liability Lawsuit
Coverage: $100,000
Lawsuit: $350,000
Out-of-pocket: $250,000
These are not hypotheticals. These are real financial gaps many families face.
How to Get Fully Protected
Step 1: Calculate updated replacement cost
Use today’s construction costs, not old purchase prices.
Step 2: Adjust dwelling coverage
Use this formula: square footage times current cost per square foot
Step 3: Inventory personal property
If your inventory exceeds your coverage, increase limits or schedule valuables.
Step 4: Review liability exposure
If you have income, equity, or drivers in the house, increase coverage or add umbrella insurance.
Step 5: Fill in gaps
Think flood insurance, equipment breakdown, home business coverage, or sewer backup.
Step 6: Review annually
Put it on your calendar. Life evolves. So should your policy.
Frequently Asked Questions
Will my premium go up if I increase coverage?
Yes, but often only by 10 to 15 percent. That’s far less than the cost of a claim gap.
How do I verify replacement cost?
Ask your agent for the estimator report. It should include square footage, construction quality, and material costs.
Do I really need umbrella insurance?
If you earn over $100,000 or own property, yes. One lawsuit can wipe out your assets.
What if I can’t afford higher coverage?
Increase your deductible to reduce premium costs and reallocate that savings to better coverage.
Don’t Wait Until It’s Too Late
If two or more of these signs apply to you, chances are you are underinsured.
Now is the time to make sure your home, belongings, and financial future are properly protected. Whether it’s recalculating your home’s replacement cost, increasing your liability coverage, or adding the flood or umbrella insurance you’ve been missing, the right policy review can save you from devastating financial surprises.
Ready to take the next step?
