As the holiday shopping season unofficially kicks off this week, about 42 million American households plan to give or receive high-tech electronic products this year. However, about seven out of eight households don’t fully understand key aspects of their insurance coverage for these purchases, according to a new national survey by Trusted Choice and the Independent Insurance Agents & Brokers of America (the Big “I”).
For the survey, respondents were asked if they were going to purchase or receive electronics, including iPods and iPhones, video gaming systems, computers and plasma televisions, during this holiday season. In addition, when asked, only about one fifth of survey respondents reported ever contacting their insurance agent with questions on coverage for high-tech electronic products when they purchased them in the past.
“With so many people giving and receiving electronics this holiday season, it is important for consumers to understand how to protect these gifts,” says Big “I” President & CEO Robert A. Rusbuldt. “In fact, any time people acquire an expensive or unusual item, we advise they consult with their Trusted Choice independent insurance agent. This new research shows us not enough consumers are doing that.”
The survey also presented respondents with five questions about insurance coverage for high-tech home electronics. An overwhelming seven out of eight households (96 million) answered at least one of these questions incorrectly.
“As our research shows so frequently, most consumers don’t fully understand their insurance policies,” says Madelyn Flannagan, Big “I” vice president for education and research. “Making matters worse, with the ever-changing technology of these types of electronics, consumers need to keep in mind that policies may not always reflect the latest features.”
Most electronic gadgets are typically covered under the standard homeowners or renters policy. However, there are some common and important exceptions that many consumers don’t understand. Coverage limitations and exclusions can include:
Digitally- downloaded data: These are not generally covered under the usual homeowners or renters policy. Consumers need to think about the value of their iTunes, downloads, and other data, as well as the time it would take to recover that material. Even in cases of fire, windstorms, and theft, when your computer is covered, downloads are not usually included. Although a few companies now offer some coverage for digital data, that coverage is limited and may not allow for full replacement or re-creation of digital material.
Electrical power surges: According to the new survey, more than half (55 percent) of Americans mistakenly believe that their insurance coverage would protect their electronics in the event of an electrical power surge. However, the vast majority of renters and homeowners policies exclude sudden loss or damage to electronics from changes in artificially generated electrical current.
Deductibles: For most standard homeowners and renters policies, the usual deductible is higher than the cost of many single electronic gadgets. About 52 percent of survey respondents were incorrect by thinking they could usually rely on their insurance policy to recoup this type of loss.
Exclusions and perils: Although electronics gear is typically covered under a homeowners or renters policy, the same exclusions apply to these items. Your electronics will not be covered in cases of flood, earthquake, mudslides, and some other specific disasters or circumstances.
Business use: Homeowners and renters polices were designed for just that — homeowners and renters use. Coverage for computers and other electronic items used for business in the home is often very limited (usually $2,500 on premises and $250 for items outside of the home).
Gift cards: Holiday shoppers nervous about giving electronics that could be an insurance risk may choose gift cards instead for their friends and loved ones. They should be aware, though, that most homeowners and renters policies treat gift cards the same as cash, reimbursing just $200 in total, no matter how many cards lost or stolen. Be sure and save all receipts and find out the store’s own policy for lost or stolen cards at the time of purchase.
The survey was conducted for Trusted Choice via telephone by TRC, an independent research company in Fort Washington, Pa. Interviews were conducted during October 2007 among a nationally representative sample of 750 households. The margin of error is +/- 3.7 percentage points at the 95 percent confidence level.
Source: Trusted Choice,