How do I know if I am underinsured?

You may be underinsured if your coverage limits are too low to fully cover your losses in a worst-case scenario. Start by comparing your policy limits against the actual replacement cost of your home, car, or other assets. For health insurance, check if your out-of-pocket maximum could devastate your finances if you faced a serious illness. For life insurance, a common benchmark is 10 to 12 times your annual income. Key warning signs include having a home insured for its market value rather than rebuild cost, carrying only minimum liability limits on auto insurance, or having a high deductible you couldn't actually afford to pay. Reviewing your policies annually with an insurance agent can help identify gaps before a claim occurs.