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Monday, August 29 2016

Americans Put Too Much Faith in Homeowners Insurance

Too few Americans take steps to prepare for disasters and too many assume their home insurance policies will bail them out if one strikes. As disaster season peaks, a new national consumer survey reveals that many homeowners lack adequate insurance coverage, do not fully understand their homeowners policies and do not have enough savings to support their households in the event of a disaster.

At least 73 percent of respondents don’t have a flood insurance policy, more than 40 percent of those surveyed don’t have or don’t know if they have coverage that will fully replace their belongings and home in the event of a disaster, and less than one-third of respondents have an up-to-date and complete home inventory stored away from their premises.

With almost three-quarters of respondents lacking proper flood insurance coverage, they are completely vulnerable and have no protection from damage caused by rising water. It is very troubling—with flooding being so pervasive and hurricane season in full swing—that this large majority of homeowners is risking everything. A little planning and knowledge can go a long way. 

More than one-fifth of survey respondents didn’t know whether they have replacement cost coverage for their belongings and home (which allows them to replace lost possessions with new items) or if they have actual cash value coverage (which takes depreciation of the structure and personal items into consideration). In most standard homeowners policies actual cash value is the default coverage. The survey shows that only 58 percent have replacement cost coverage. The risk of financial ruin in the event of a major disaster is significantly higher for those homeowners who have only actual cash value coverage because they cannot fully recoup their losses.

Posted by: AT 02:40 pm   |  Permalink   |  Email
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