Policygenius Survey Reveals Most Consumers Misunderstand Home Insurance

property damage

A large majority of Americans lack the knowledge necessary to make accurate decisions about their home insurance coverage, a recent survey by online insurance marketplace Policygenius has found. The survey questions were posed to a nationally representative sample of 2,500 Americans over the age of 25. Respondents were made up of both homeowners and non-homeowners.

The survey asked about homeowner’s insurance topics such as:

  • What the amount of home insurance coverage needed is based on
  • How much homeowners can save by bundling their home and car insurance
  • Which disasters, such as fires and floods, are and aren’t covered

The survey discovered that, among other things, American homeowners may be unknowingly under-insuring or over-insuring themselves. This trend of buying less coverage than needed or, conversely, buying more than necessary was prevalent among most of the respondents. Homeowners around the country are therefore setting themselves up to either be vastly under-protected in the event of a catastrophe or spending far too much money on their insurance.

Many homeowners, it seems, also do not seem to realize that any significant changes made to the interior or exterior of their home should be reported to their insurer—otherwise those new additions may not be covered if something happens. New pets and expensive purchases like jewelry should also be reported.

Our Bonita Springs property damage attorneys have put together the main takeaways from the survey below.

Homeowners Don’t Understand What the Cost of Their Insurance is Based On

According to the survey, 54.4% of the total respondents believe that their home insurance cost is based on the market value of their home. However, this is false. The actual determinate of the cost of home insurance should be based on the home’s rebuild cost.

By basing the cost of insurance on the amount of money it would cost to rebuild a home should something happen to it, insurers are more accurately covered. Yet, since most people believe their insurance is based on their home’s market value, it is likely that many American homeowners are either getting too little coverage or are paying for far more coverage than they would ever need.

Homeowners Are Missing Out on Chances to Save Money

At 83.2%, a stunning majority of homeowners underestimated how much money they could be saving by combining their home and auto insurance policies with the same company. This practice, known as bundling, can save the average homeowner 30% in insurance costs, yet most survey respondents estimated the savings to be closer to 10% to 15%.

Homeowners May Not Know What Property Damage Is & Isn’t Covered

More than half of homeowners, as well as over 25% of non-homeowners surveyed, did not realize that a typical home insurance policy doesn’t cover floods. Even more shocking is that over 80% of current homeowners do not know that the average policy also doesn’t cover earthquakes. Most plans cover fire, theft, and heavy wind—and that’s it. Homeowners are therefore likely to be unprotected when it comes to property damage claims from natural disasters, especially if they live in areas prone to floods and earthquakes.

Want to know more about homeowner’s insurance and Americans’ opinions on it? To see the Policygenius survey in full, click here.

Do you have questions about your homeowner’s insurance? Or do you need to make a claim for property damage? Out Bonita Springs property damage attorneys have you covered. Our family-run law firm is dedicated to providing the compassionate and comprehensive legal representation you require during your time of need. Contact us now!