Troubles with Insufficient Sum Insured


Protect your assets with good quality insurance

Here is the second question. Again it is from overseas, which makes it a bit more difficult to answer but the principles should be the same.

Good Day,

My wife and I purchased, in 2003, American Family’s best policy they offered.  A Form V, Gold Star Policy.  We have never denied coverage or failed to report any addition (which there were none).

Do we have any recourse?

American Family simply states that it is the Insured’s ultimate responsibility and that they bear no liability.


My response reads as follows:

Hi Derek,

Thanks for your note and I am genuinely sorry to hear of your problem.

I am based in Australia and while I know our laws and those of several other countries very well, I am not an expert in US law or insurance practice but am trying to learn fast. While the terminology is clearly different, the principles appear the same.

What I can say is that at the end of the day, the sum insured selected is yours as the Insured. Having said this, I find it difficult to understand why the insurer’s policy had a limit in their software capping the level of cover that was available unless the insurer only had a risk appetite for lower value properties and or did not have re-insurance in place to cover higher value properties.

From what I have been able to find out for you, it appears that you are not the first person to allegedly fall foul of this policy. Here is a link to a judgment involving what could be the same insurer and product:

As for the agent, an insurance adviser is there to provide advice on your insurance needs. He/she should know what covers are available and should advise you of any shortfalls before any loss occurs.

I am aware that some US Insurers, Chubb come to mind, provide a valuation service and if you accept their valuation they will always
reinstate your home. I am not sure if this is available in all states/counties.

You need to obtain some local advice rather than rely on my general advice. The trouble is you need to find one that is not going to charge you a mountain of money and make your position worse. It has to be good, sound, accurate advice.

If you can advise me what city/town you are in and the state, I will make some enquires and see if I can find either an attorney or
public adjuster who can provide you with the answers you seek.

I look forward to hearing from you.


The team at LMI Group is currently modifying one of our eServices LMI PolicyComparison to the US Market to assist insurance advisers with their decision-making process, but we are finding that the policies and regulations are different by state and in some cases by county. This makes the process much more difficult, but we are determined to get there in the end.


A person’s home is one of their most important assets. The protection of this should not be left to chance or to the cheapest policy available. (I am not suggesting that Derek and his family choose this policy that way.) I cover this in the podcast found on the right-hand pane of this blog. All insurance needs to be considered on the coverage afforded by the Policy, the financial strength rating of the insurer, the claims service provided by the insurer with price coming in last.

My strong advice to anyone buying insurance is to use a competent insurance broker you trust.

3 responses to “Troubles with Insufficient Sum Insured”

  1. Allan says:


    I want to thank you so much for your time. In situations like this, we homeowners often times feel so lost. It is only through people like yourself that we can feel some sense of hope. I will read your blog immediately and look forward to evaluating the Minnesota decision. Again, a sincere thank you from my wife and I for your time.

    P.S. we are located in Missouri here in the States. If you do come across any pertinent info we would be more than grateful. Thank you again Allan.


  2. Sam says:

    This article has inspired me to carry on focusing on my own blog

  3. Ian says:

    Very good post. I””m going through a few of these issues as well. Gurr!!!

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