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15 surprising consumer actions & beliefs related to homeowners' insurance

Results of the Insurance Information Institute 2016 Consumer Insurance Survey

Insurance agents and brokers have an opportunity to improve consumer understanding of products and services by increasing educational outreach to homeowners. (Photo: Shutterstock)
Insurance agents and brokers have an opportunity to improve consumer understanding of products and services by increasing educational outreach to homeowners. (Photo: Shutterstock)

What do your clients really know about their homeowners' insurance?

Are you confident they understand the coverage available for earthquakes and floods? What about liability coverage? And how do potential clients shop for homeowners' insurance?

The answers are in the latest Insurance Information Institute (I.I.I.) Research publication, "Homeowners Insurance: Understanding, Attitudes and Shopping Practices."

Consumer survey


The report is based on a survey conducted to measure consumers and homeowners' attitudes and knowledge about insurance. The I.I.I. Consumer Insurance Survey was conducted in May 2016 via live telephone interviews with 1,006 adults (18 years and older), residing in the continental United States. I.I.I. enlisted the aid of ISO, a Verisk Analytics business, to make certain that the losses discussed were or were not covered by standard homeowners' insurance policies.

The good news is that a majority of homeowners are aware that their policy will provide coverage for damage caused by fire, hail and wind. Most also know that items stolen from their house are covered.

Knowledge gap


However, homeowners have gaps in their knowledge of their coverage. Many homeowners are not aware of a variety of perils that are covered by standard policies and incorrectly think that certain events are covered, when they're not.

Insurance agents and brokers have an opportunity to serve customers and improve consumer understanding of products and services by increasing educational outreach to homeowners.

Related: Home, sweet home: Homeowners' insurance by the numbers

Here are 15 key findings from I.I.I.'s survey of homeowners:

comparison shopping

Fewer than one out of five policyholders compares homeowners' insurance prices online. (Photo: iStock)

1. Comparison shopping


Only 44 percent of homeowners comparison shop for homeowners' insurance (by any method) when their policy comes up for renewal.

In contrast, 69 percent of consumers indicated in November 2015, that they comparison shopped for auto insurance when their policy comes up for renewal. This higher rate of comparison shopping may, in part, reflect the fact that a greater percentage of people view auto insurance as a financial burden, as compared to homeowners' insurance (49 percent vs. 31 percent).

Related: Insurer customer satisfaction tied to online buying experience

insurance agent with clients

For homeowners who shop for insurance, the most popular method is to talk with an insurance agent in person. (Photo: iStock)

2. Prefer talking to an agent in person


The most popular method for homeowner insurance comparison shopping is by speaking with an insurance agent in person (29 percent).

The I.I.I. recommends that consumers educate themselves about their coverage, recognize that they may have gaps in their coverage and seek guidance from an insurance professional when they purchase or renew a policy.

Related: Insurance consumers: We'll give up our data for personalized service

budget

Americans decreasingly view the cost of homeowners' insurance to be a financial burden. (Photo: Bigstock)

3. Paying for homeowners' insurance


Only 31 percent of Americans consider homeowners' insurance to be a financial burden.

This is the lowest level in more than a decade, and represents a significant drop from the 49 percent of people in 2009, who said the cost of homeowners' insurance was a financial burden.

Related: 10 states with the highest and lowest homeowners' insurance rates

Because mortgage lenders generally require customers to insure their homes, the vast majority of American homeowners — about 93 percent — maintain at least basic homeowners insurance. Many view homeowners' insurance as a fixed cost of owning a home, though rates vary widely depending on where you live.

graph:Financial burden of homeowners' insurance, 2009-2016

(Source: Insurance Information Institute)

Rescue crews survey a flooded neighborhood

Rescue crews survey a flooded neighborhood Tuesday, Feb. 7, 2017, in Felton, Calif. Despite public education efforts, a significant portion of homeowners mistakenly think that flood damage is covered by their standard homeowners insurance, without the need for supplemental insurance. (AP Photo/Marcio Jose Sanchez)

4. Flood damage


A startling 43 percent of homeowners incorrectly believe damage from heavy rain flooding is covered under their standard insurance policy.

Floods in 2016 caused billions of dollars in property damage. Unfortunately, many of these losses were uninsured because most homeowners don't purchase supplemental flood insurance. The percentage of homeowners who do purchase flood insurance has hovered between 10 percent and 14 percent since 2010, according to I.I.I.

Related: Reframing the client conversation around flood insurance

Brent Davis helps clean out a home that was heavily damaged by floodwaters caused by rain from Hurricane Matthew

Brent Davis helps clean out a home that was heavily damaged by floodwaters caused by rain from Hurricane Matthew in Nichols, S.C., Thursday, Oct. 27, 2016. A stew of contaminants stood inches to feet deep in homes for a week. As it receded, toxic black mold grew rampant, leaving nearly all of the town’s 261 homes uninhabitable. Few, if any, had flood insurance. (AP Photo/Mike Spencer)

5. Hurricane storm surge


Remarkably, 28 percent of homeowners incorrectly think hurricane storm surge flood damage is covered by a standard homeowners' policy.

Related: Homeowners in path of Hurricane Matthew are less likely to be insured

earthquake damaged chimney at a home in Mineral, Va.

Scott Hambrick, left, and Christopher Hartman, right, work to cover a damaged chimney at a home in Mineral, Va., Tuesday, Aug. 23, 2011. A magnitude 5.8 earthquake hit the area which was felt up and down the east coast. (AP Photo/Steve Helber)

6. Earthquake damage


An unexpected 29 percent of homeowners incorrectly think that standard homeowners' insurance covers earthquake damage.

Related: It's time to talk to your insureds about earthquake coverage

meteorites striking city

(Photo: Shutterstock)

7. Airborne perils


Only 27 percent of homeowners know that their policy covers a meteorite striking their home.

44 percent are aware their policy covers an airplane or plane debris hitting their home.

Related: My homeowners' policy covers that?

tsunami floods over the breakwater protecting Miyako Japan

A tsunami floods over the breakwater protecting the coastal city of Miyako at Heigawa estuary area after northeastern Japan was hit by a powerful earthquake, on Friday, March 11, 2011. (AP Photo/Mainichi Shimbun, Tomohiko Kano)

8. Tsunami storm surge


A small group of homeowners (18 percent) incorrectly believe their policy covers a tsunami storm surge.

Related: 6 homeowners' policy endorsements agents and brokers need to know

home collapsed by a sinkhole

In this Jan. 4, 2017 file photo, a construction worker walks by a home collapsed by a sinkhole in Fraser, Mich. Repairs to a broken sewer line that caused a massive sinkhole north of Detroit are estimated at more than $78 million. (AP Photo/Carlos Osorio)

9. Sinkholes 


More than 30 percent of homeowners surveyed incorrectly believe their policy covers sinkholes.

Related: Sinkhole collapse and mine subsidence: What is encompassed by these endorsements?

A mudslide damaged home in Orinda, Calif

A mudslide damages as home after series of storms Friday, Feb. 10, 2017, in Orinda, Calif. (AP Photo/Marcio Jose Sanchez)

10. Landslides & mudslides


A shocking 24 percent of homeowners incorrectly believe their policy covers mudslides, while 23 percent of homeowners incorrectly believe their policy covers landslides.

Related: Snow, landslides & avalanches

sewage backup

(Photo: Shutterstock)

11. Sewer backup 


This could be messy: 55 percent of homeowners think they have coverage for a sewer backup.

Some homeowners' policies may provide coverage for sewer backups under certain circumstances. Generally, sewage backups are not covered without a rider or separate policy.

lightning damaging electronics

(Photo: iStock)

12. Lightning power surge damage


An astonishing 59 percent of homeowners think they have coverage for lightning power surge damage to electronics.

Some policy may provide lightning power surge damage to electronics, under certain circumstances.

Related: Insurers paying more for fewer lightning strikes, report says

Workers put a tarp on the roof of a damaged home in the aftermath of a tornado that tore through New Orleans East

Workers put a tarp on the roof of a damaged home in the aftermath of Tuesday's tornado that tore through the New Orleans East section of New Orleans, Wednesday, Feb. 8, 2017. Officials say tornadoes that struck in southeastern Louisiana destroyed homes and businesses, flipped vehicles and left thousands without power. (AP Photo/Gerald Herbert)

13. Additional living expenses


It's rather surprising that 27 percent of homeowners don't think they have additional living expenses (ALE) coverage.

Standard homeowners' policies generally cover special living costs incurred when you cannot live in your home because of an insured loss. Covered costs include additional expenses for temporary housing, hotel bills, restaurant meals and other expenses.

Related: Insurance basics for new homeowners

dog biting man

(Photo: Shutterstock)

14. Dog bite liability


Only 54 percent of homeowners recognize that their standard homeowners' policy provides liability coverage for medical payments for a visitor bitten by your dog.

A standard homeowners' policy will pay medical costs if your dog bites or injures someone. The policy can be changed to exclude a specific pet.

Related: How much will a dog bite cost? About $37,200

little girl using laptop at school

(Photo: Shutterstock)

15. Theft


Only 30 percent of homeowners know that the theft of a child's laptop while at school is covered by their policy.

Related: 5 factors to minimize home-related risks

Related

7 homeowners trends for 2017

New coverage risks for the year ahead.

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