Your home is your greatest asset after your life. Under-insuring your home means devaluing it to save few bucks of premium. In case of any extreme emergency you have an option of loan against property that is a mortgage. Another thing is under insuring is a sign of dishonesty to the Supreme Authority (Government). Here in such a case of under insurance you wish to enjoy the privileges of the economically backward classes. It is a malpractice and hence should be prohibited. Another thing is if you under insure your home you may not get the right price incase you wish to sell your home.