A recent article from Insurance News suggests that a large portion of homeowners do not have a clear understanding of what their policy is comprised of. As a former claims adjuster, I found that much of my time was spent helping customers determine what their coverage should be, or better put, how it should have been before the loss. Not always, but often, regular people find themselves owing for damages that exceed their policy limits due to circumstances that they underestimated when buying their coverage.
Ok, so how much then?
A good insurance agent will insure your home for the reconstruction cost. As the attached article suggests, the costs of replacing your home vs. the market value can create a significant gap in coverage. When you purchase insurance you purchase peace of mind. That peace of mind goes right out the window when you realize that there is not enough money in the policy to pay for all that was lost. This is especially true for the contents of your home.
Most people don’t realize the value of their possessions. Your agent should encourage you to catalogue your contents by taking pictures of your property to be stored at the agency. This will ensure an easier claims process. Can you imagine trying to recall and further prove the value of your possessions after they have been destroyed?
Do you know who your agent is?
After reading the article, the question that remains to be answered is why a third of Americans lack a proper understanding of their insurance policies. Could it be that they are afraid to ask questions? Could it be that their agent has not properly informed them? Could it be that they have no agent at all? Many insurance companies are moving back toward the grassroots, hands on approach of the past. It seems people are realizing that there is comfort in knowing that the person responsible for their education and coverage can be contacted locally as opposed to in a call center across the country.
I can not emphasize enough the value of insurance education. Understandably it is tedious and possibly a little boring to many, but this is why you have a professional agent to attend to your needs. If you don’t, you need one.
Here is a link to the referenced article, it is definitely worth a read.