Millions of U.S. homes are underinsured, not because of any added value in the homes, but because additional structures on the homeowner’s property have gone unreported and are without protection.
Using artificial intelligence and aerial imagery to analyze one million residential properties across the U.S., ZestyAI found nearly half (45%) have multiple structures – many of which are overlooked or improperly covered by insurers. These findings highlight a growing challenge for insurance carriers striving to provide accurate risk assessments and comprehensive coverage.
While 31% of homes have one additional structure, 11% have two additional structures, and 4% have four or more, such as detached garages, sheds and outbuildings.
For multi-structure properties, it’s all about zoning regulations and local industries. In states with thriving agricultural sectors, such as Montana, Wyoming, and Wisconsin, over half of properties have additional buildings such as barns, sheds, or guest cottages. Montana and Wyoming lead with 59% and 58% of properties having multiple structures.
Meanwhile, densely populated areas like California and Rhode Island are adapting zoning laws to encourage Accessory Dwelling Units (ADUs), contributing to a rising number in multi-structure properties. Georgia (26%) and North Carolina (29%) report the lowest prevalence.
Detached buildings, like garages or ADUs, can go unnoticed during the underwriting process if not explicitly declared. An undisclosed and potentially dilapidated secondary structure exposes the insurer to unforeseen risk, leading to situations where claims for these structures are unexpectedly high, driving up losses.
Underinsured secondary structures expose the homeowner and the insurer in the event of a claim. Residential policies typically offer limited coverage for detached structures, which are often inadequate compared to their actual value. In the past, insurance carriers needed to rely on the slower processes of physical inspections or property records, which can be outdated or overlook secondary structures. AI data can also assess roofs, helping insurers predict potential losses and reducing the need for physical inspections.
Annual reviews are crucial in updating home insurance policies for coverage. Insureds should feel empowered to contact their agent anytime an update has happened on their home or property. At The Oak Insurance Group we do annual reviews with our customers to ensure accurate and up to date information to avoid costly mistakes.