The results of a survey conducted on behalf of the Independent Insurance Agents and Brokers of America and Trusted Choice got us to thinking about what consumers know about their homeowners and auto insurance coverage. As we said in our last post, 61 percent of respondents were somewhat familiar or not familiar with the particulars of their policies.
The results did not include a breakout by state, but we would not be surprised if insureds in Florida were a little more up-to-speed on their insurance coverage than most people. Over the past few years, property and auto, and even flood insurance have made the headlines often.
The survey shows that plenty of policyholders across the country don’t bother to review what their policy covers and how much the insurer will pay for a loss, and that could spell trouble for them. For example, if your policy does not cover your garage, and your garage burns down, you will have a tough time arguing that the insurance company should cover it anyway. The odds are in the insurance company’s favor in a claim dispute like that.
Problems arise for the consumer, too, if there isn’t enough coverage. Say your property is valued at $250,000, but your insurance will only cover losses up to $100,000. If your house burns down, you will only get the $100,000 — just up to your limit.
Deductibles are another detail that policyholders tend to overlook. In the example above, if the deductible were $100,000, the homeowner would get nothing. If you can’t afford your deductible, the insurance company is not going to make up the difference for you.
According to the survey, most consumers understand that coverage, coverage limits and deductibles are more important than the premium. The 25 percent of respondents who put premiums ahead of everything else, though, could end up with the wrong coverage, not enough coverage or even too much coverage. That is why insurance professionals and consumer advocates urge homeowners and drivers to review their policies carefully at least once a year.
And what better time of year to do it than when your health insurance policy comes up for renewal? Consumers may want to think about all of their insurance plans at once to make sure their coverage meets their needs without breaking the bank.
Source: Financial Advisor, “Americans Short On Insurance Knowledge,” Dec. 24, 2013Share