Monday, March 28 2011
Too many Americans mistakenly believe that the coverage limits of their home owners insurance policy are linked to the market value of their home, according to the Insurance Information Institute.
In the I.I.I.’s 2011 Insurance Pulse Survey, conducted by the Opinion Research Corporation, nearly half (48%) of survey respondents came to that incorrect conclusion.
One out of three respondents to the Pulse Survey reported that they purchased less home owners or auto insurance as a way to save money. A better strategy would be to take a higher deductible, which can substantially reduce insurance costs. Home and car owners can then put the savings into a purchasing the right amount and type of insurance for their specific needs, pointed out Salvatore.
Another way to save money is to comparison shop, something that seven out of 10 Pulse Survey respondents said they did to save on both their home and auto insurance needs.
I.I. I. says three biggest insurance mistakes home owners can make are:
1. Insuring a home for its real estate value rather than for the cost of rebuilding. When real estate prices go down, some home owners may think they can reduce the amount of insurance on their home. But insurance is designed to cover the cost of rebuilding, not the sales price of the home. You should make sure that you have enough coverage to completely rebuild your home and replace your belongings.
2. Selecting an insurance company by price alone. It is important to choose a company with competitive prices, but also one that is financially sound and provides good customer service.
3. Dropping flood insurance. Damage from flooding is not covered under standard home owners and renters insurance policies. Coverage is available from the National Flood Insurance Program (NFIP), as well as from some private insurance companies. Many home owners are unaware they are at risk for flooding, but in fact 25% of all flood losses occur in low risk areas. Furthermore, with the significant snow fall this winter, spring related flooding may be particularly severe, thus increasing the importance of purchasing flood insurance.
Source: Insurance Information Institute
Read more: http://www.houselogic.com/news/articles/insurance-mistakes-avoid-dont-risk-being-underinsured/#ixzz1GyKgD7Zt