Nearly 95 percent of homeowners have some form of homeowners’ insurance. Most have a basic understanding about their insurance policies. But, a survey by the Insurance Information Institute revealed that many homeowners have significant knowledge gaps about what is and what is not covered by a standard homeowner’s insurance policy. As you might imagine, these gaps can be very costly.
The good news is that according to the survey, a majority of homeowners correctly identified perils that are covered by a standard homeowner’s insurance policy.
- Fire (91%)
- Theft (79%)
- Hail (73%)
- Burst Pipes (71%)
The not so good news is that many homeowners think other perils are covered even though they aren’t. For example,
- 43% think damage caused by flooding from heavy rain is covered.
- 28% think hurricane storm surge flood damage is covered.
Standard homeowners’ insurance does not cover damage caused by flooding from heavy rain or a hurricane-driven storm surge. A separate flood insurance policy is needed to cover this kind of damage. Though flood insurance is available through the National Flood Insurance Program and from some private insurers, the Insurance Information Institute found that only 12% of homeowners carry flood insurance.
Another common misperception involves “earth movement” coverage. According to the survey, many homeowners incorrectly believe the following perils are covered by standard homeowners’ insurance:
- Sinkhole (31%)
- Mudslide (24%)
- Landslide (23%)
Supplementary insurance is often needed to cover these perils. Mudslide damage can be covered by a flood insurance policy, but landslides, sinkholes and earthquakes typically require separate, specialized policies.
The survey also found that many homeowners were not aware of various coverages that are included in a standard policy.
- 43% didn’t know that theft of possessions from their car may be covered.
- 54% didn’t know that theft of a camera while vacationing may be covered.
- 70% didn’t know that theft of a child’s laptop while at school may be covered.
- 56% didn’t know that damage caused by airplane debris may be covered.
- 73% didn’t know that damage caused by a meteorite may be covered.
Given the complexities of homeowners’ insurance and the wide range of risks associated with owning a home, homeowners are encouraged to speak with a reputable and experienced insurance agent. Knowledge is the key to protecting your most valuable asset.
Please contact us to learn more about obtaining adequate homeowners’ insurance coverage.
To receive regular updates about developments which may affect you, subscribe to Setnor Byer Insurance & Risk’s weekly risk management news brief.