Homeowners Confused About Insurance Coverage: Survey

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Many homeowners do not understand what exposures are covered under their home insurance policy, according to a new consumer survey.

More than two in five Americans (41 percent) believe that a standard homeowner’s insurance policy protects against mold damage, according to new InsuranceQuotes.com survey.

“This misconception could prove extremely costly,” said Laura Adams, senior insurance analyst, InsuranceQuotes.com. “Mold remediation can cost tens of thousands of dollars. It’s often not covered by homeowner’s insurance, especially if it was caused by neglected maintenance such as a leaky pipe.”

The survey also revealed that many homeowners are misinformed regarding personal belongings stolen from a car (73 percent aren’t aware that this type of theft is covered by homeowner’s insurance) and earthquake damage (51 percent don’t know that this is not covered by a standard homeowner’s insurance policy).

Two better understood aspects of homeowner’s insurance are fire damage (90 percent of Americans know that homeowner’s insurance covers this) and lawsuits from an injured visitor (72 percent know this is covered).

Just under one-quarter of homeowner’s insurance policyholders said that they chose their current provider primarily because of a recommendation from someone they trust (22 percent). A similar number (21 percent) said the most important factor was the service they received from their agent. Seventeen percent said their decision hinged on getting the lowest price. But only 1 percent of homeowners insurance purchasers said a radio or television commercial was the most important factor in their decision.

The survey was conducted by Princeton Survey Research Associates International (PSRAI). PSRAI obtained telephone interviews with a nationally representative sample of 1,003 adults living in the continental United States. Telephone interviews were conducted by landline (500) and cell phone (503, including 229 without a landline phone). Interviews were done in English by Princeton Data Source from April 4-7, 2013. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error for the complete set of weighted data is plus or minus 3.7 percentage points.

Source: InsuranceQuotes.com

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  • June 17, 2013 at 7:00 pm
    Jack says:

    I find it hard to believe that only 1% of all homeowners’ policies are purchased via mainstream advertising on radio and TV. If that is the case, companies are wasting millions on sports advertising, evening news broadcasts, stadium naming rights, etc. If the carriers take that survey to heart, the whole advertising structure will crumble (which may not be a bad idea, anyway). I question whether 1,003 participants is a valid cross-section, though a quick internet search shows that this group appears legitimate and has been around for 25 years, so they must have some credibility.
    A follow-up survey to determine the main sources of policy purchasing would seem appropriate, since there appears to be 60% of purchases that are not accounted for; the 21% attributable to good service did not reveal the original reason for going with that particular carrier, only why they renewed. They would have no idea of the quality of service if not for going with them in the first place, yet only 22% is attributable to referrals.

  • June 17, 2013 at 7:04 pm
    Jack says:

    Seems hard to believe only 1% purchase du to radio and television advertising. That means millions are being wasted on Sports programming, Evening news shows, stadium naming rights, and the like. What generates the other 60% of purchases, since the 21% attributable to good service is not what motivated the original purchase, just the renewal t
    There are 22% for referral, 17% for price and 1% from media advertising. That leaves an awful big vacuum!

  • June 17, 2013 at 9:05 pm
    Pauldz says:

    Maybe all of the advertising is for brand awareness.

    The figures for why people choose theire insurer makes no sense either. 21% choose their insurer based on their agent’s service. How is that significant unless they are a captive agent? And no mention of how the other 40% of the people surveyed pick their insurer. That’s an awful lot to put in the “other” category.

  • June 18, 2013 at 6:27 pm
    Mike says:

    @Pauldz – What does being captive have to do with a comparison on service? I was a captive and now I am an Independent. I am able to give more options and better service as an Independent. Product knowledge is a big key.

  • June 19, 2013 at 3:22 pm
    Lydia says:

    Doesn’t surprise me. Many homeowners view an insurance policy as a “maintenance” policy. They want their plumbing leaks and roof repairs covered under their policy even if they have been less than diligent about keeping up the maintenance on their home.

    One of the consequences of the direct writers in pushing only price as been the public’s perception that the auto & homeowner contracts are all standard and all cover the same thing.

    It becomes difficult to try to educate the public when all they have on their mind is “15% off”.

    In fact I can’t cross the bridge from one county to another in my neck of the woods without reading splattered across the toll booths “15%, what more can you say”.

    So how do we change that?

  • June 21, 2013 at 4:54 pm
    Tony says:

    Most buyers are too cheap to read or investigate. They want the cheapest policy but then claim they bought the Cadillac when things go wrong.

  • June 21, 2013 at 6:13 pm
    Martin Gray says:

    Warren Buffet spends more on advertising than GEICO brings in. But why should he care?

  • July 2, 2013 at 11:57 pm
    hoolah says:

    It sure doesn’t help that most of the major carriers are selling the idea of “quote your own” or “buy online” policies. I’ve gotten leads this way and am floored to see that people doing their own quotes are also determining their own replacement cost(yikes!) Very bad business in my opinion.

  • July 3, 2013 at 9:42 pm
    Brenda says:

    They should include a class in highschool or just a section of home-ec. to be called “Your (Everyday)Financial Responsibility”

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