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Insurers lost out on $2.7 billion in premiums in 2010 because of consumers failing to disclose information about household drivers, according to a 2011 Quality Planning report. Those losses don't just hurt the insurance companies; they get passed on to other customers in the form of higher premiums overall.

2. Remodeling your house without increasing home insurance coverage

Review your home insurance periodically to make sure the amount jibes with current construction costs and takes into account any improvements you make. You should insure your home for the cost to rebuild it.

"Anytime you make changes -- adding a room to a house, upgrading your kitchen or bath -- notify your insurer so that these changes are reflected in the policy," says Tully Lehman, a spokesperson for the Insurance Information Network of California.

Otherwise you will be underinsured. Lehman recalls one Lake Tahoe, Calif.-area homeowner who, over the course of many years, remodeled a small two-bedroom, one-bath house into a two-story mountain dream home. Trouble was he never changed the amount of home insurance coverage. After a fire swept through the area and leveled the house, the home insurance payout was enough only to rebuild the original, modest structure.

The problem is surprisingly common.

One year after the September 2011 central Texas wildfires, for instance, 56 percent of affected homeowners reported being underinsured by an average of $110,000, according to United Policyholders, a consumer advocacy group in San Francisco.

Here are home insurance basics.

3. Expecting home insurance to cover your home business

Just because you work at home doesn't mean your business is covered by home insurance. Typically home insurance covers just $2,500 in business-related property, and includes no liability coverage for business activities.

What if one of your business consulting clients slipped and fell on your stairs? Or a batch of cookies from your baking business sent someone to the hospital? Home insurance wouldn't cover your legal expenses if you were sued.

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