Oklahoma homeowners are being encouraged to take a closer look at their insurance policies after the state’s Insurance Commissioner warned that common mistakes could leave households exposed to substantial financial losses following a disaster.
In guidance aimed at helping residents better protect their properties, Oklahoma Insurance Commissioner Glen Mulready highlighted several areas where homeowners frequently fall short, including failing to review policies regularly, choosing cover based solely on price, neglecting home inventories and overlooking available discounts.
The advisory comes as severe weather, fires and other natural disasters continue to place pressure on homeowners and insurers alike, increasing the importance of ensuring that policies provide adequate protection.
One of the most significant concerns identified by the Oklahoma Insurance Department is the failure of homeowners to review their insurance cover on an annual basis. Changes such as home renovations, major purchases and rising construction costs can all affect the amount of insurance needed to fully protect a property.
Officials warn that many homeowners only discover gaps in their coverage after making a claim, when it may be too late to address policy limitations or insufficient coverage limits.
The issue of underinsurance remains widespread. Research conducted by the University of Colorado Boulder examined 5,000 insurance claims arising from the 2021 Marshall Fire and found that 74% of policyholders were underinsured. The study also revealed that the most severely underinsured homeowners carried coverage limits below 75% of their home’s replacement cost.
The findings illustrate the financial risks associated with inadequate cover. A homeowner with a property valued at $300,000 could potentially face a shortfall of around $75,000 following a total loss if insurance limits do not reflect current rebuilding costs.
Lowest Premiums May Not Provide Adequate Protection
The Oklahoma Insurance Department also cautioned consumers against selecting policies based solely on premium costs.
While lower-priced policies can help reduce monthly expenses, they often come with higher deductibles, lower coverage limits and additional exclusions. These limitations may significantly reduce the amount paid out following a claim.
Insurance experts recommend that homeowners understand whether their policy is based on actual cash value or replacement cost coverage. Actual cash value policies reduce payouts to reflect depreciation, whereas replacement cost coverage is designed to cover the full expense of rebuilding or replacing damaged property at current prices.
Understanding these differences is becoming increasingly important as inflation and construction costs continue to influence rebuilding expenses across the United States.
Another common mistake highlighted in the guidance is the failure to create and maintain a comprehensive home inventory.
Following a major loss, homeowners are often unable to accurately remember or document all of their belongings. This can delay claims and make it more difficult to receive appropriate compensation.
Officials recommend recording household possessions using photographs, videos and serial numbers. Maintaining digital copies of inventory records can provide an additional safeguard if physical documents are destroyed during a disaster.
Discounts and Resilience Programmes Can Lower Costs
The department also noted that many homeowners miss opportunities to reduce insurance costs through available discounts and risk-reduction programmes.
Bundling home and motor insurance policies is one of the most common ways to secure savings. Additional discounts may be available for homeowners who invest in measures designed to improve the resilience of their properties.
Programmes such as the Insurance Institute for Business & Home Safety’s Wildfire Prepared Home™ initiative and the FORTIFIED™ programme are designed to help homeowners reduce the risk of damage from severe weather and other hazards.
According to the department, homeowners who install a FORTIFIED™ roof may qualify for lower insurance premiums, with average annual savings estimated at around $720. Residents may also be eligible for assistance through the Strengthen Oklahoma Homes grant programme, which helps fund stronger and safer roofing systems.
Mulready emphasised the importance of taking a proactive approach to insurance planning rather than waiting until after a disaster occurs.
“Insurance should be proactive, not reactive. Taking time to review your policy, understand your coverage, document your belongings, and ask about discounts can save you money.”
The Oklahoma Insurance Department said regular policy reviews, accurate home inventories and a clear understanding of available coverage options can help homeowners avoid unexpected financial burdens and improve their resilience in the face of future losses.
