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Your Home Is Worth $500,000. So Why Is It Insured for Only $350,000?
If those numbers do not match, is your house underinsured — or is the insurance quote measuring something completely different?
This story was written with AI assistance under my editorial direction and was reviewed and fact-checked before publication.
A homeowner looks at a new insurance quote.
The house could probably sell for about:
$500,000.
Then they look at the homeowners policy.
Coverage A — Dwelling:
$350,000.
The reaction is immediate.
“Wait. My house is worth $500,000. Why is the insurance company only covering $350,000?”
It sounds like something must be wrong.
Maybe the agent entered the wrong information.
Maybe the insurance company is underinsuring the house.
Maybe saving a few hundred dollars in premium today could leave the homeowner short by $150,000 after a fire.
That would worry me too.
But then I hear the opposite question.
A homeowner has only $300,000 left on the mortgage, but the insurance company wants $500,000 of dwelling…
