Recent Study Reveals Major Confusion Over Home Insurance Loss Coverage

A recent study by the National Association of Insurance Commissioners shows many homeowners are still confused about exactly what types of losses their homeowner insurance policies cover. The results are actually quite surprising and show the need for homeowners to take better care in understanding what they are getting when taking out their coverage. Making assumptions, or not clarifying exactly what types of losses are covered, can cost you dearly when disaster strikes.

The survey found the following misconceptions by policy holders:

• 33% believe their policies cover flood damage.
• 51% believe their policies cover rising dirty water like water main line breaks or broken sewer lines.
• 34% believe mold damage is covered.
• 31% believe termite damage is covered.

Many also do not understand that additional insurance may be needed for things like wind coverage, earthquake coverage or personal property coverage. Respondents were also confused over the difference between actual-cash-value coverage and replacement-cost coverage.

• Actual-Cash-Value Coverage policies only cover what it will cost to repair or replace damage to a home and its contents after depreciation is taken into consideration.
• Replacement-Cost Coverage policies cover what it will cost to replace or rebuild without considering depreciation.

Not understanding your policy or what types of coverage you should have, depending on the area of the country you live in, can be a monumental mistake. Homeowners need to do their homework, ask questions and take the time to get the proper information in order to make sound insurance coverage decisions. In most cases, you're talking about protecting your largest single investment. It's better to be safe than sorry in the end.

For more information on homeowners insurance coverage’s, contact us at Gulf Coast Associates, Realtors® and we'll be happy to assist you.

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