The Home Insurance "Gap" That Could Cost You Everything (And How We Fix It)

Your home is more than just a place where you sleep. It’s where you’ve built your life, raised your family, and likely invested the majority of your savings. It is your sanctuary. Naturally, when you purchase a home insurance policy, you do so with a specific peace of mind: the belief that if the unthinkable happens—a fire, a severe storm, or a catastrophic accident—you will be made whole again.

But here is the uncomfortable truth that many homeowners in Minnesota, Wisconsin, and Iowa are discovering too late: most home insurance policies are not built to get you back to where you were.

In an era of rising inflation, supply chain shortages, and skyrocketing construction costs, "check-the-box" coverage is no longer enough. At Fallon Insurance Agency, we believe that insurance shouldn’t just satisfy a mortgage requirement; it should actually protect your future. If you are relying on a standard policy you bought five years ago on auto-pilot, you might be walking on a financial tightrope without a net.

This guide will walk you through the critical gaps in modern home insurance and exactly how our "Real Coverage" approach—featuring Extended Replacement Cost and vital add-ons—closes them.

The "Market Value" vs. "Replacement Cost" Trap

The single biggest misconception in home insurance is that your home should be insured for its market value (what you could sell it for).

In reality, your insurance needs to cover the replacement cost—the actual price of labor and materials required to rebuild your home from the ground up in today’s economy. And lately, those two numbers are drifting further and further apart.

The Inflation Problem

We have all seen the headlines. The cost of lumber, copper, concrete, and skilled labor has surged. If your home burns down, a builder cannot rebuild it for 2019 prices. They have to rebuild it at 2026 prices.

If your policy limits are set based on outdated appraisals or simple market value, you could find yourself tens of thousands—if not hundreds of thousands—of dollars short when it comes time to rebuild. This is what we call "underinsurance," and it is a financial disaster that happens after the physical disaster.

The Fallon Solution: Extended Replacement Cost

At Fallon Insurance Agency, we don't believe in leaving your biggest asset to the whims of the lumber market. That is why we include Extended Replacement Cost in our quotes.

This specific coverage is a safety buffer that kicks in if the cost to rebuild your home exceeds your policy limit. It provides additional funds—above and beyond your dwelling coverage limit—to help pay for the surge in construction costs following a disaster.

For homeowners in communities like Cannon Falls, Rochester, Hudson, and Eau Claire, this is essential. When a major storm hits our region, demand for contractors spikes, and so do prices. Extended Replacement Cost ensures that you aren't left with a half-built home because your insurance payout ran dry. It is the difference between "settling" for less and truly rebuilding your life.

The "Unseen" Disasters: What Happens Underground?

When you imagine a home insurance claim, you probably picture a tree falling on the roof or a kitchen fire. These are visible, dramatic events. However, some of the most expensive and frustrating claims happen where you can’t see them: underground and in your pipes.

Standard policies often exclude or severely limit coverage for water backup and service lines. At Fallon Insurance Agency, we consider these protections non-negotiable for a robust protection plan.

Sewer and Drain Backup

Imagine walking into your basement after a heavy rainstorm or a municipal sewer clog, only to find ankle-deep water that smells terrible. This isn't just "water damage"; it is a biohazard.

Cleaning up a sewer backup involves professional mitigation teams, ripping out drywall, replacing flooring, and sanitizing everything. It is expensive, messy, and stressful.

Many basic policies offer $0 or a very low limit for this specific type of loss. At Fallon Insurance Agency, we don't leave you high and dry. We include Sewer & Drain Backup coverage of up to $25,000.

This $25,000 limit is a game-changer. It ensures you have the resources to hire the right professionals to clean up the mess and replace your damaged property, without draining your emergency fund. In the Midwest, where basements are common and weather is unpredictable, this coverage is vital.

Service Line Protection

Here is a fact that catches many homeowners off guard: You own the utility lines that run under your yard.

From the street to your house, the water, sewer, and power lines are generally your responsibility. If a tree root grows through your sewer pipe, or if an old water line collapses due to age or freezing, the city will not come to fix it. You have to call a plumber and an excavation crew.

Digging up a yard, repairing a pipe, and re-landscaping can easily cost $5,000 to $10,000. Most standard homeowners policies provide zero coverage for this, viewing it as "maintenance."

We think differently. We include Service Line Protection with up to $10,000 in coverage for repairing underground pipes and wiring. This coverage protects you from the sudden, jarring expense of excavation failures, ensuring that a broken pipe doesn't break your bank account.

Beyond the Walls: Appliances, Codes, and Identity

A home is a complex system. It’s made of wood and shingles, yes, but also expensive mechanical systems and legal requirements. Real coverage needs to address the breakdown of these systems and the changing laws that govern them.

Equipment Breakdown Coverage

If your refrigerator dies, you buy a new one. But what if your central air conditioner fails in the middle of a humid July heatwave? What if your furnace gives out during a Minnesota blizzard? Or your water heater bursts?

These aren't just inconveniences; they are mechanical failures. Standard home insurance typically excludes "mechanical breakdown" or "wear and tear." Homeowners are often told to buy separate, expensive home warranties to cover these items.

We offer a smarter alternative: Equipment Breakdown Coverage. This endorsement on your home insurance policy covers the sudden mechanical or electrical breakdown of your home systems—HVAC, appliances, water heaters, and more. It often provides better coverage than a standalone warranty and is seamlessly integrated into your policy.

Ordinance & Law Coverage

Building codes change constantly. If your home was built in 1980, it met the codes of 1980. But if it is severely damaged today, you cannot rebuild it to 1980 standards; you must rebuild it to current codes.

This might mean upgrading electrical wiring, installing new fire safety features, or changing the pitch of a roof. These mandatory upgrades can add thousands of dollars to a reconstruction bill—costs that a standard policy might not cover.

Our policies include Ordinance & Law Coverage to pay for these legally required upgrades. This ensures that you remain compliant with local regulations without having to pay for the government-mandated improvements out of pocket.

Identity Theft Protection

In the digital age, your "home" extends to your digital life. Identity theft is one of the fastest-growing crimes, and untangling it takes time, money, and legal expertise.

We include Identity Theft Protection to provide you with the coverage and support needed if your identity is stolen. It’s just another layer of the "Smarter Protection" we promise to our clients.

The Fallon Difference: "We Actually Give a Damn"

You can buy insurance from a lizard, a cartoon general, or a faceless 1-800 number. But when the worst happens, those 1-800 numbers don't show up.

Fallon Insurance Agency was founded by Leland Fallon with a simple, powerful goal: to raise the bar. We are an independent agency proudly representing Farmers Insurance®, serving Minnesota, Wisconsin, and Iowa. But more importantly, we are your neighbors.

Our philosophy is simple: We actually give a damn.

This isn't just a marketing slogan; it’s how we operate.

Local Agents: We are real people located in your community, not a call center overseas. When you call, we answer.

Quote Reviews: We don’t just email you a price. We review your quotes to uncover dangerous gaps—like missing sewer backup coverage or insufficient liability limits—that other agents might ignore to get you a "cheaper" price.

Bundling Strategies: We help you combine Home and Auto insurance not just for convenience, but for massive savings. Our clients often save hundreds, sometimes over a thousand dollars, by bundling intelligently.

We serve clients from Cannon Falls to Rochester, from Hudson to Eau Claire, and everywhere in between. We understand the specific risks of our region—from ice dams to summer storms—and we build policies that hold up when disaster strikes.

Why "Cheaper" Isn't Better

There is always a cheaper policy out there. You can always strip away coverage, lower limits, and remove protections to drop a premium by $20 a month.

But insurance isn't about saving $20 a month; it's about saving you from losing $200,000 later.

When you choose Fallon Insurance Agency, you aren't buying the "minimum legal requirement." You are buying a promise that your lifestyle will be protected. You are buying the certainty that if a pipe bursts, a sewer backs up, or a fire starts, you have the Extended Replacement Cost and the specific endorsements needed to recover fully.

Conclusion: Don't Wait for a Claim to Find the Truth

The worst time to read your insurance policy is after a fire truck has pulled away from your curb.

If you are unsure whether your current policy includes Extended Replacement Cost, $25,000 in Sewer/Drain Backup, or Service Line Protection, you need to find out now.

Don't let inflation and hidden gaps put your family's future at risk.

Schedule a Policy Review with Fallon Insurance Agency today. Let us look at your current coverage, show you where the holes are, and provide you with a quote for Real Coverage.

Whether you are in MN, WI, or IA, we are here to help you protect what matters most. Because at Fallon Insurance Agency, we don't just sell policies—we protect homes