NEWS RELEASE -
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The survey found that only 37 percent of respondents correctly
answered six of 12 questions about basic coverage on their
homeowner and auto policies, such as the maximum amount of
stolen cash that would be reimbursed if a home were burglarized
or what the most frequent cause of an insurance claim is for
a loss in the home.
"The survey findings show a critical need for homeowners
to communicate with their insurance agents and learn what
their policies actually cover and when they should be updated,
to ensure they are fully protected in the event of a disaster,"
said Scott Garfield, vice president of Fireman's Fund. "Homeowners
also need to know that all policies are not created equal,
and to understand the array of insurance options available
in comparison to their current coverage before they are faced
with a costly disaster."
Gap Between Perceived & Actual Coverage - The survey,
based on responses from more than 1,000 affluent homeowners
nationwide, uncovered a consistent gap between what homeowners
think is included in their coverage, and what actually is.
Of those polled, 88 percent said they know what their homeowners
policy does and does not cover, yet further questioning revealed
that many respondents also believed that their homeowners
policy covered more property than would actually be covered
in the event of a disaster.
"We found that two-thirds of those surveyed believed
that their policy would provide home replacement of like kind
and quality in the event of a major loss," said
Fireman's Fund is one of a select few insurers who offer high-limit
homeowners policies that protect full home cost replacement
coverage in most states with umbrella personal liability protection
policies in the $1 to $50 million range.
"Most standard homeowners insurance
policies do not automatically provide complete replacement
cost coverage," said
Because of its constant emphasis among customers on insuring
to value, Fireman's Fund received no complaints of underinsurance
on the
Homeowners Spend Too Little Time Managing Insurance -
The survey showed that most affluent homeowners spend far
more time managing their investment portfolios (an average
of seven hours a month) than they do staying on top of the
insurance coverage for their homes. The survey found that
respondents spend an average of 4.7 hours per year -- fraction
of the time spent on their investment portfolios -- managing
their insurance coverage on their physical assets including
their home. This is true despite the fact that for nearly
half (47 percent) of respondents, the value of their non-financial
assets exceeds the value of their investment portfolio.
"Frankly, we believe most respondents polled nationwide
probably spend more time updating their home computer virus
software or even planning their vacations than they do protecting
their largest personal asset: their home," said Garfield.
"This surprising lack of attention to homeowners insurance
can be financially devastating, especially for those who fell
victim to the recent weather catastrophes."
Nationwide Home Values Increasing, But Not The Coverage -
Given the inflation in home prices across the country,
more people in the last five years are suddenly in the position
of having their home become an even more valuable asset. According
to the latest quarterly survey by the National Association
of Realtors(R), home values across the nation are continuing
to rise, with the national median existing-home price 6.6
percent higher than a year ago. In some states such as
In addition to the rise of property values, home reconstruction
and replacement costs are also climbing at a steady rate.
With a healthy rise in new construction, recent hurricanes
and ongoing trade disputes, the cost for lumber, plywood and
other building materials is continuing to rise. According
to the lumber industry publication Random Lengths, framing
materials alone, such as 2-by-4s, are up nearly 40 percent
over last year. Without the right insurance coverage, homeowners
may see these extra costs coming straight out of their own
pockets.
According to the Harris Interactive survey, while 94 percent
of the respondents nationwide stated that the value of their
home increased during the past five years, more than a quarter
(27 percent) said they had not increased their insurance coverage.
Some of the most common reasons cited were lack of time to
look into the need to increase coverage, and simply not knowing
that they needed to change the policy's limits to reflect
a home's change in value.
The overall lack of insurance policy knowledge by today's
homeowners will continue to prove costly until the issue of
homeowners insurance is realized as one of today's most critical
financial investments.
This
news release is brought to you by the commitment and assurance
of the A.D. Dern Insurance Agency, Inc., keeping you up to
date and aware of the ever changing California Insurance market
place. Continue to check back with us for other insurance
articles of interest.