Many Americans admit to having a knowledge gap when it comes to what their home insurance actually covers, according to a new survey.
Nearly one third (31 percent) of Americans don't know how much their most valuable assets -- their homes -- are insured for, and an additional 46 percent don't know how much coverage they have for their homes' contents, such as furniture and clothing, say the results of a survey by Zogby International for MetLife Auto & Home. Additionally, many homeowners aren't aware of coverage overlaps that may exist, which could result in opportunities to save money.
The first of a two-part "Insurance Literacy" survey, tested consumer knowledge of insurance basics, including homeowners, condo, and renter's insurance.
Common misconceptions that could lead to coverage gaps were:
-- Thirty percent of homeowners believe their insurance coverage is based on the current market value of their home. Actually, the available coverage limit for homeowners insurance is based on the cost to rebuild the home, a mistake that could lead to confusion for homeowners trying to evaluate whether they have the right amount of insurance.
-- More than two thirds (71 percent) of those surveyed believe insurance pays for the full cost to rebuild their property in the event of a major loss, such as a fire or other natural disaster. But nearly all insurance companies "cap" the amount paid to rebuild the dwelling following a total loss, unless additional coverage is purchased. Furthermore, the coverage is subject to a deductible, and certain causes of loss, such as water damage caused by the natural disasters of flooding, are excluded completely.
Read more: http://www.insurancejournal.com/news/national/2010/08/24/112704.htm#ixzz0xYD5NFUf
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