70% of Homeowners May Be Underinsured — by an Average of 20%

A supermajority of homeowners want full coverage, believe they have it, and are wrong — by a lot. That's the conclusion of an analysis by California Western School of Law professor Kenneth Klein, covered by CNBC this month: more than 70% of homeowners are likely underinsured by an average of roughly 20%.

The gaps are predictable once you know where to look. Standard policies exclude or limit floods, earthquakes, and high-value items like jewelry and antiques. And rebuilding costs have climbed so fast that a policy limit set five years ago may no longer cover what it would actually cost to rebuild today.

With wildfires, hurricanes, and flooding growing more frequent and more expensive, an underinsured home puts a family's biggest financial asset at risk precisely when it matters most.

The renter's version of this story is just as common: most renters' belongings are worth far more than they guess, and landlords' policies never cover tenants' things. Whether you own or rent, the fix is the same — check your limits against today's replacement costs, ask what's excluded, and fill the gaps before you need them. Source: CNBC, 'Homeowners may be underinsured: 3 coverage gaps to know' (Sept 2026).