Experts say many homeowners have a coverage gap in their insurance. The homeowners don't know about it. The experts do know about it. The experts sell insurance.
This is how insurance works. You pay someone to cover a thing. They take your money. Then later you find out they don't actually cover the thing. You've been giving them money for years to protect you from a risk that they contractually refuse to protect you from. It's a beautiful system. Really airtight.
The coverage gap exists because policies exclude certain types of damage or cap payouts below replacement costs. Nobody reads the policy. Why would you? It's forty pages of legal text written specifically so you can't understand it. You sign it. You pay monthly. You assume you're covered. You're not covered.
Insurance companies employ teams of people whose only job is finding reasons not to pay claims. They're very good at it. They've had practice. Meanwhile homeowners employ zero people to read their policies because homeowners have jobs and lives and assumed the thing they bought does what they thought they bought it to do.
When disaster strikes these homeowners will file claims. The claims will be denied or paid at a fraction of the cost. The homeowners will be shocked. The insurance companies will point to page twenty-seven subsection D paragraph four. The homeowners will pay out of pocket to rebuild. They'll keep paying their premiums too because they still need insurance for the next thing that isn't covered.
Financial advisors recommend reviewing your policy annually and purchasing additional riders to close gaps. Or you could skip the policy entirely, invest the premium payments in an index fund, and self-insure. Both strategies result in you eating the loss anyway, but at least with the second one you're not pretending someone else gives a sh*t about your house.
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