Do you understand the coverage on your Homeowner’s Insurance Policy?

In a survey conducted by the Trusted Choice and the Independent Insurance Agents and Brokers of America, it was found that many homeowners lack adequate homeowner’s insurance coverage, do not understand their homeowner’s policies, and do not have adequate savings to support them if they are forced to vacate their homes in the event of a disaster.

According to the survey, at least 73 percent of respondents have not purchased flood insurance, to protect themselves against rising water or flooding, including the common problem of seepage of underground water into their homes. Many think a flood will be covered by their homeowner’s policy. According to FEMA, floods are the leading cause of loss in the United States. Most flood losses occur in areas outside the high-risk flood zones.

More than 40 percent of respondents did not know if they have coverage that will fully replace their furnishings and their home in the event of a covered loss (replacement cost coverage) or if they had actual cash value coverage, which takes depreciation of the building and personal property into consideration. Many agents sell actual cash value policies as a way to save the consumer premium dollars, much to the chagrin of the policyholder at the time of loss.

Most respondents to the survey were not able to fully support themselves for up to three months if they were out of their homes as the result of a covered loss. They didn’t realize that a standard homeowner’s policy provides only limited protection and a flood policy provides no coverage for these expenses, which, especially during the season, can be considerable.

The survey was conducted in August 2016, according to Insurance Journal, September 6, 2016, Vlume 94, no. 17, page 12.

Barbara Gracey Backer
Barbara Gracey Backer

Barbara Gracey Backer is the Vice-President of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Professional and Personal Insurance. She may be contacted at (561) 404-5746 or at

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