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Combating misconceptions about homeowners' insurance

Property and Casualty Insurance
by Glenn Tobleman
Combating misconceptions about homeowners' insurance
Combating misconceptions about homeowners' insurance

One of the biggest issues in almost every aspect of the insurance industry is that consumers often don't fully understand the coverage they pay for each month, and that applies to everything from life policies and health insurance to the homeowners' coverage they need to protect what is often the single biggest investment of their lives. To that end, it's incumbent upon providers to make sure they're educating their policyholders about what home insurance does and does not cover.

A recent survey of consumers who had home insurance in place found that 84 percent thought they paid a deductible when filing an insurance claim, and nearly a quarter of respondents didn't know how much liability insurance they have, according to Insurance.com. In addition, about 1 in 3 homeowners didn't compare rates to make sure they chose the most affordable coverage that fit their needs.

Only a little more than half of those polled actually understood what liability insurance covered, while more than 1 in 5 thought it dealt with damage to their homes, the report said. But perhaps more problematic was that one-third of those polled thought flood insurance was included in a standard home insurance policy; this issue was particularly prevalent among younger consumers who likely have far less experience with homeownership and dealing with the related insurance issues.

Wind can cause serious damage to a home.Wind can cause serious damage to a home.

A common issue
One of the biggest things that many homeowners might not expect would impact their coverage costs, but can actually have a significant effect, is the type of dogs they own, according to Click 2 Houston. In general, dog owners may be required to pay more for coverage than those who do not own dogs, because their mere presence - often regardless of breed - can increase liability risks such as biting incidents, trip-and-fall issues and so on.

However, some breeds carry with them more risk than others, and will typically lead to even higher premiums, the report said. These include pit bulls, Staffordshire terriers, Rottweilers, German shepherds, mastiffs, Akitas, huskies and a number of other large dog breeds. In some cases, owning these dogs may lead some insurers to simply not offer coverage to homeowners at all. That can limit owners' options significantly when they need to get homeowners' insurance for their properties, and lead to them paying potentially thousands of dollars more than they otherwise might have.

Understanding risks
Indeed, when consumers consider what they pay for home insurance, they may not look at it in the same way insurance companies themselves do, according to Today Home. For instance, if their properties are at particularly high risk of wind storms, hail or flooding, their premiums are likely to be quite high, but people may not understand how widespread damage from those weather-related incidents can be. Indeed, those three issues (with flooding divided between weather-related water and non-weather-related water) make up the four most common causes of home insurance filings.

Wind damage includes not only damage from wind directly (which may not be particularly common) but also wind knocking over large objects - such as trees, telephone poles and so on - into a home or other parts of the properties, the report said. That can also include items in the yard such as patio furniture and playground equipment.

"The most common source or cause of damage is wind-related," Scott Humphrey, second vice president of risk control at a major home insurer, told the site. "Look around your house and say, 'What could hit my home?'"

That kind of understanding may really help consumers see why their insurance costs what it does, and here too it's important for policy providers to make sure homeowners understand those issues, the report said.

Emerging issues
Finally, a large number of consumers now live in states that have effectively decriminalized at least some aspect of marijuana use, and many homeowners may now take to growing the plants in their own homes, according to the Metrowest Daily News. But that can create other liability issues, because marijuana use is still technically illegal under federal law. Some companies might cover it, other companies might not and often this will vary on a case-by-case basis; typically, if the marijuana is at the root of the claim (such as if a fire starts as a result of the grow operation) that is something many insurers will reject out of hand.

The more insurers can do to clarify what is and isn't covered by standard homeowners insurance, the better off they will be in terms of avoiding disputes with policyholders and fostering a stronger long-term relationship even in cases where claims need to be filed.



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