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NAIC Survey Finds Many Homeowners Ignorant of What Policies Cover

A large percentage of U.S. homeowners mistakenly believe that standard homeowners insurance protects them from a wide array of perils, according to new research by...
June 12, 2007

A large percentage of U.S. homeowners mistakenly believe that standard homeowners insurance protects them from a wide array of perils, according to new research by the National Association of Insurance Commissioners (NAIC), which recently hosted its summer conference in San Francisco. Many homeowners don't understand that typical property and liability policies don't cover home damage from floods, earthquakes, water line breaks, termites, vermin, mold, and many other perils large and small. The NAIC survey found 33 percent of U.S. heads of household, who own a home and have homeowners insurance, incorrectly believe flood damages would be covered by a standard homeowners or property and liability policy, despite extensive media coverage on Hurricane Katrina victims whose claims were denied because they lacked flood insurance.

What It Means to Agents: There's an old saying in advertising that just when people in any business are getting sick and tired of hearing a message, the public is only beginning to become aware of it. Even if you're renewing the policy of a longtime customer, don't cut back on giving a "Homeowners 101" talk about their policy. Perhaps the three most important words you can say to every client are: "Read your policy!" Of course, part of the problem with the public being confused is advertising by some carriers that creates the impression that everything will always be covered.

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