A recent survey from Trusted Choice, a group representing members of the Independent Insurance Agents & Brokers of America (the Big “I”), reveals a startling gap in knowledge among U.S. homeowners about their insurance policies. Despite many believing they have a strong understanding of their coverage, the reality tells a different story.
One of the most significant findings from the survey shows that 56% of respondents were unaware that flood damage is excluded from a standard homeowners policy. This misconception could lead to severe financial consequences for homeowners who might assume they are protected against flood-related losses.
The survey, conducted via mobile devices and targeting 400 consumers with various insurance types, highlights several other critical areas where homeowners and auto insurance policyholders lack crucial knowledge. For instance, seven out of ten respondents were unaware that their policies do not cover materials or fixtures installed during renovations. This ignorance could result in unexpected out-of-pocket expenses if damage occurs during or after home improvement projects.
Furthermore, nearly half (46%) of those surveyed did not have, or were unsure if they had, a home inventory of major household items. A home inventory is essential for filing accurate claims in the event of theft, fire, or other disasters. Without it, homeowners may find it challenging to prove the value of their lost items, leading to insufficient claim settlements.
The survey also revealed significant misconceptions among auto insurance policyholders:
- 44% incorrectly believed that personal items stolen from their car are covered by a standard auto insurance policy.
- 57% were unaware that a parking ticket does not affect their auto insurance premiums.
- 55% did not know that a standard auto policy does not cover business use of the vehicle.
These findings underscore the importance of policyholders thoroughly understanding their insurance coverage. Misunderstandings can lead to unexpected costs and insufficient coverage when it matters most. It’s crucial for homeowners to review their policies regularly and consult with their insurance agents to ensure they have the right protection in place.
For example, homeowners living in flood-prone areas should consider purchasing separate flood insurance to safeguard their properties. Additionally, maintaining an up-to-date home inventory can expedite the claims process and ensure more accurate reimbursements.
Insurance can be complex, but with the right information and guidance, homeowners and auto insurance policyholders can make informed decisions that provide true peace of mind. The survey from Trusted Choice highlights the need for ongoing education and communication between insurers and their clients to bridge these knowledge gaps and enhance overall coverage awareness.
For more details on the survey, Insurance Journal covered this topic in a recent article.
