Millions of families have wrong insurance coverage

January 2, 2005

Trusted Choice survey shows consumers remain underinsured for major life, work events

At least 32 million U.S. households own insurance policies that aren’t right for them, a new national survey conducted by independent agents’ Trusted Choice has found.

The survey provides insight into the haphazard shopping behavior of insurance consumers, who sometimes over-insure for specific events and ignore or overlook major coverage gaps.

Among those homeowners who said they “significantly remodeled their homes” since 2003 including a structural change such as adding a room, porch or deck nearly 40 percent had not updated their homeowners insurance, or weren’t sure if they had done so, to reflect the new value of their homes. This equates to almost eight million U.S. households that may be improperly insured.

Among those owning a valuable collection, such as wine, fine art, jewelry or antiques, nearly half (47 percent) said they didn’t own special insurance coverage for the collectibles.

More than four out of 10 families who said they had a young driver move away from the home hadn’t updated their family’s auto insurance coverage to reflect that change. Of those who are frequent carpool drivers to a job, school or activities with children, an alarming 85 percent hadn’t changed their liability insurance coverage to reflect the increased risk of additional passengers in the automobile.

The Trusted Choice survey further demonstrates a lack of understanding about property and liability risks faced by renters. Of families who rent, nearly 7 in 10 said they don’t have renters insurance.

Also, a third of those families with a new baby, or 5 million households, hadn’t updated their life insurance protection.

Annual check-up
The findings illustrate the importance of an annual policy checkup and the New Year is an excellent opportunity for a review, says Trusted Choice spokesperson Madelyn Flannagan.

Insurance isn’t top of mind for most consumers as they go through these changes in work and life, but an annual review typically would uncover some coverage deficiencies, according to Flannagan. The survey found that fewer than 60 percent had performed “a comprehensive review” of all of their insurance coverage in the last two years. That means a total of 32 percent of respondents have outdated policies, Flannagan said. “Families should make a New Year’s resolution to get their arms around these issues,” Flanagan said, “especially as they’re acquiring new valuables over the holidays or starting new jobs in January, for instance.”

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