III: Close to half of homeowners mistaken about home insurance
A recent survey from the Insurance Information Institute (I.I.I.) found that almost half of homeowners mistakenly believe that the coverage limits of their home insurance policy are linked to the market value of their home.
Forty-eight percent of respondents to the I.I.I.’s 2011 Insurance Pulse Survey, conducted by the Opinion Research Corporation, were unaware that home insurance policies do not cover the market value – or sales price – of the insured home. In reality, homeowners insurance policies cover rebuilding costs – not the market value – of a home.
Insured opting for less coverage
The survey also discovered that one out of three respondents purchased less auto insurance or home insurance as a cost-saving measure. According to the I.I.I., a better strategy would be to take a higher deductible, which can reduce insurance premiums while leaving coverage amounts intact.
In addition, seven out of ten respondents to the Pulse Survey noted comparison shopping as a cost-saving strategy for both auto and homeowners insurance.
I.I.I. reminds about flood insurance
The recent report from the I.I.I. also touched on the subject of floods, reminding homeowners that flood damages are not covered in a typical homeowners insurance policy. Instead, homeowners who determine a need for flood coverage must obtain a separate flood insurance policy.
Last week, March 14-18, National Oceanic and Atmospheric Administration (NOAA) sponsored Flood Safety Awareness Week, in an attempt to educate homeowners and renters about the hazards of flooding.