MONDAY, AUGUST 22, 2016
The Insurance Journal magazine had an interesting article that caught my attention this morning. First of all it is important because the article talks about homeowners perception of the value of their insurance in case of a disaster and in light of this there are three disturbances brewing right now in the Atlantic Ocean ! One is already a named depression... FIONA . The articles titled "Americans Put Too Much Faith in Homeowners Insurance". The basis for the article is a new survey that was done by the Independent Insurance Agents Association of America or what agents call the "Big I". I fully concur with the findings because in my 30 years in the insurance business and having been through one of the nation's worst catastrophes, Hurricane Hugo in 1989, consumers won't take the time to even read their homeowners policy and won't buy flood insurance unless it is required by a mortgage company. This of course is a broad brush and makes assumptions about "every consumer". I understand that there are exceptions but I have found that those are extremely rare. Consumers or in this case homeowners are fixed on one thing... the cheapest insurance policy. That means not taking the time to review the coverages and compare them among different insurance carriers. Just like all cars are different, so are insurance policies. Some policies are like a luxury car and some are like an economy car with no extra features. The time to figure out what type you have is not after a disaster strikes but that's the typical consumer. And it doesn't matter if the consumer or homeowner is a highly educated person or one with little education, they're all fixed on getting the cheapest policy available. Instead what they should consider are the coverages included in case of a claim. What's the deductible? Is there a hurricane, named storm or just a wind deductible? What is covered? What's not covered? Does the policy provide for loss of use if the house is not habitable after a "covered claim"? A covered claim is one covered by the policy. Seems like a stupid statement but did you know that a flood claim is not a covered claim on a homeowners insurance policy? Flood damage is covered on a flood insurance policy and unless you have one then don't expect to be covered for any amount of a flood insurance loss.
The article stated that 73% don't have a flood insurance policy and 40% don't know if the policy they have will "fully replace their belongings and home in the event of a disaster". What do they expect? Do they think if they don't understand what is covered or not covered then ignorance will suffice or the government will come to the rescue? If they're wealthy then one can certainly self insure and just pay for all damages out of pocket or those that are not covered by insurance. If you haven't read your home insurance policy or met with your agent to discuss this in detail then I hope you have a big piggy bank. As an owner of a family insurance agency that has been in business for 113 years I find this entire problem to be an epidemic. The survey showed that only 56% of people surveyed have enough to support their family for just 3 months if they had to move out because of a catastrophe. 28% couldn't' even make it for a month.
Every year I scream from the mountain top that you need to meet with us to review your policy(ies). Seriously... this is important and we will take the time to review your policies and provide advice as to how you can get better coverage. Just remember one thing... After a disaster do you want the insurance company paying your bills or your bank account? Really. Lets get our game on here and prepare. Most of our clients live in coastal South Carolina and this is a tropical zone. This is a part of the country that has had hurricanes and tropical storms in the past and will have them in the future. Ignorance is no excuse. We're here to help you understand the risk and mitigate your losses. Call us for a review of your homeowners and flood insurance policies. We also welcome newcomers. If your agent is sleeping at the wheel then call us. We're not.