Insurance Blog

Finance Blogs » Insurance » Home insurance draws a big duh

Home insurance draws a big duh

By Jay MacDonald · Bankrate.com
Friday, September 3, 2010
Posted: 7 am ET
Home with blue sky

A new survey suggests that many Americans don't know their insurance coverage on their biggest asset: their home.

Remember those entertaining Nationwide TV commercials that ended with the punch line, "Life comes at you fast?" That gray-haired Fabio rowing the gondola beneath the Bridge of Sighs was some Mad man's subtle reminder that life insurance, home insurance, auto insurance and health insurance only seem inert and boring until we need them.

Unfortunately, the very pace of modern life may be a major reason why many Americans are overpaying for homeowners insurance.

According to a new MetLife survey conducted by Zogby International, nearly a third (31 percent) of those polled did not know how much their home was insured for and nearly half (46 percent) were equally clueless about coverage for their home’s contents, including furniture and clothing.

It gets worse: 30 percent believe their homeowners insurance coverage is based on the current market value of their home (it’s based on the cost to rebuild your home), 73 percent believe their home insurance will pay the full cost to replace personal belongings (there’s usually a deductible and belongings are depreciated), and 64 percent believe that in a major loss, their insurance would cover mandatory building code upgrades (uh, no).

I recently blogged about a survey by the National Association of Insurance Commissioners that found that fewer than half of us are able to answer the most rudimentary questions about auto insurance and health insurance.

In the case of homeowners insurance, what we don’t know can hurt us, both as an unpleasant surprise come claim time and as a slow but steady cash drain due to coverage overlaps that might present opportunities to lower our monthly premium.

Sure, life comes at you fast. But that’s no excuse to ignore the details of your homeowners insurance. Chances are, your home is your most valuable asset. Logic would dictate that you shift as much homeowner risk as possible onto your home insurance company.

Have you ever had an unexpected and costly surprise on a homeowners insurance claim because you didn’t review your policy thoroughly? If so, I'd like to hear about it.

Follow me on Twitter!

Discover the best home equity moves to make with Bankrate's Home Equity Strategies & Advice newsletter.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.