American consumers have an alarming lack of knowledge about their automobile and homeowners insurance, according to Trusted Choice and the Independent Insurance Agents and Brokers of America (IIABA).
The lack of knowledge could mean home and automobile owners are missing coverage they need, or they are paying more than necessary for policies, according to the two groups that represent independent agents and brokers.
A recent survey conducted for Trusted Choice and IIABA found that 38 percent of respondents say they have never conducted their own research before buying an insurance policy. In addition, 40 percent say they are not confident or only somewhat confident that they have adequate insurance coverage for their needs.
Sixty-one percent of respondents say they are only somewhat familiar or not familiar with the details of their insurance policies.
The survey, which included 930 American households, found that more then one-third of insurance policyholders have not met with or talked with their agent within the last year.
“It’s critical that consumers understand the basics of protecting their family, home and property,” says Robert Rusbuldt, IIABA president and CEO. “This survey shows that many Americans may not even realize they are vulnerable to serious losses. A lot can happen in a year. The start of a new year is a perfect time to dust off your insurance policies and review them thoroughly.”
An earlier survey found that 34 percent of homeowners and 20 percent of automobile owners do not know if they are receiving all of the discounts they are entitled to. Discounts can save policyholders as much as 30 percent in premium costs, according to IIABA and Trusted Choice.
Trusted Choice urges policyholders to know their coverage limits. Liability limits can be increased dramatically for minimal premium increases, Rusbuldt says.
In fact, the survey says only 29 percent of respondents consider coverage limits, or the amount of coverage, the most important criteria when selecting an insurance policy. Instead, 25 percent of respondents think price is the most important criteria in policy selection.
While price should be a factor in insurance decisions, choosing coverage based on price alone could ultimately be a costly mistake, says IIABA and Trusted Choice. Insurance policies differ widely, with varying deductibles, coverage limits and exclusions.
A mistake some people make with homeowners insurance is not telling the agent when a home is put in a trust as part of an estate plan. Also policyholders fail to find out how extended absences from their homes can affect coverage.
People sometimes fail to list valuables or collectibles as part of their estate even though these items require special coverage beyond a standard homeowners policy. If there is a loss on these items, the heirs will not be compensated. “Making certain that everything is properly documented -- and insured - -is crucial to guaranteeing that your final wishes are executed after your death,” says IIABA and Trusted Choice.
In addition, not having certain specialty coverage could cost homeowners dearly, say the two organizations. Failure to purchase sewer and drain back up insurance, flood insurance, earthquake insurance, ordinance or law coverage, or to adjust coverage as property improvements are made could have detrimental consequences in the event of a disaster.