More than half of homeowners say they know very little about their home insurance policies and coverages, according to a survey by HomeInsurance.com.
Some 54 percent of all homeowners surveyed admitted to knowing, “not much at all” about their homeowners policies.
“The reason people need to understand their homeowners insurance is because it’s the only way to know if you have the right amount of insurance and the right type of insurance,” said Carolyn Gorman, vice president of the Insurance Information Institute.
Some of the most dangerous aspects homeowners often ignore on their policies are: replacement value, deductibles and covered losses, says HomeInsurance.com.
“So often a homeowner will upgrade their home and never update their home insurance policy. When the listed replacement value is no longer enough to rebuild their home to the new standards, the homeowner is often left underinsured,” said Carlos Lagomarsino, CEO of HomeInsurance.com.
Oftentimes a homeowner will set their deductibles high or low, depending on their financial ability to cover damages if need be, says Lagomarsino. “If their financial situation changes, they often neglect to update their deductible. This can cause a homeowner to pay either an unnecessarily high premium or leave them unprotected with a high deductible they cannot afford to meet in the event of a claim.”
Lagomarsino also said one of the most poorly understood aspects of homeowners insurance is actual coverage. Homeowners insurance policies can vary in types of coverage but a standard home insurance policy typically covers dwelling, contents, other structures, medical payments, liability and loss of use.
“When talking to homeowners it becomes apparent that many of them are unaware of the limitations of their policies. Some homeowners don’t realize that they have liability insurance built into their homeowners insurance. Others think that flood damage is covered,” said Lagomarsino.
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