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 percent) 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 percent of homes have one additional structure, 11 percent have two additional structures, and 4 percent have four or more, such as detached garages, sheds and outbuildings, according to ZestyAI, a provider of climate and property risk analytics solutions powered by AI.

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 percent and 58 percent of properties having multiple structures, respectively.

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 percent) and North Carolina (29 percent) report the lowest prevalence, according to the Zesty AI analysis.

“Understanding the full scope of a property’s structures is critical for accurate risk management by insurers,” said Attila Toth, founder and CEO of ZestyAI. “Our findings underscore the importance of advanced analytics to help insurers ensure comprehensive coverage while managing risk effectively.”

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.