More than four out of 10 Americans who have a homeowners' policy do not understand the relationship between a deductible and a premium, according to a recent study by the Insurance Research Council. Even among those who know that their policy has a deductible, 38 percent do not understand that when the deductible increases, the premium decreases.

Thirty-seven percent of those who filed a claim within the past five years, 37 percent of homeowners, and 48 percent of renters -- all of whom knew that their policy has a deductible -- answered incorrectly when asked how an increase in a deductible affects a premium. They answered that the premium either increases, stays the same, or they did not know.

"These findings suggest that a large percentage of the American public does not understand one of the fundamental principles of insurance," said Elizabeth A. Sprinkel, IRC senior vice president. "Homeowners struggling with insurance affordability may be uninformed about one of the simplest ways to reduce their premium."

The report also indicated that most Americans find it easy to obtain affordable homeowners' insurance that meets their needs. Low-income homeowners are only slightly less likely than affluent homeowners to find it easy to obtain appropriate and affordable insurance. Filing a claim within the past five years has a small to negligible effect on the percentage of homeowners who find it easy to obtain insurance.

Find more information at www.ircweb.org.

Special Reports /

IRC: Policyholders Unsure of Deductible-Premium Relationship

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