There is a morbid joke going around among some of us in the New York area about what we found we can't control: we've had an earthquake and hurricane within one week; all we need is a plague of locusts and our disaster experience with Mother Nature will be complete.

Some of us can laugh at this idea, but for those whose lives have been turned upside-down, there is nothing to laugh at.

Hurricane Irene has left us all with searing memories of events none of us want to relive again.

Some of us suffered minor inconveniences—getting an evacuation order and spending the night at a friend's home during the storm and coming home to a few inches of water in the basement.

Others have suffered greater inconveniences—power outages for a week with some predictions that it could be another week before the lights are on again in some homes.

For hundreds, maybe thousands, their lives have been totally upended. The force of the storm has left homes uninhabitable, businesses closed indefinitely, entire towns obliterated, practically removed from the map.

There are scenes of devastation in some places that I am familiar with for their former bucolic condition. Today, they resemble war zones due to the uncontrollable forces of nature.

Whether large or small, those of us who have been affected by Irene have made our calls to the insurance company. We wait anxiously for a determination that will assist us with getting our lives back in order. We hope the insurer will fulfill that promise to help us become whole again.

But that expectation has not been fulfilled for many in the past, and it is not the fault of the industry, at least in as far as strict contract language is concerned.

Indeed, as in the aftermath of so many disasters, there are many people who are just realizing that the homeowners policy they've been paying for all these years won't help them. They now discover that their insurance doesn't cover flood.

This is not a new story, except for those of us in the Northeast who have never gone through an experience like this.

I'm not surprised to hear these complaints. I'm sure many agents, brokers and underwriters are not surprised either.

But it's an old story that begs the question—is enough being done to educate consumers?

I've been covering this industry for more than a decade now, and frankly, it befuddles me that after every disaster, policyholders make the same complaints against their carrier: they've been paying their premium on a timely basis all these years, why isn't their policy there for them?

Granted, some of that is probably a segment of the public seeking coverage they know they never had, but I would say that is a minority.

I am certain that more than a few of those consumers are just bewildered by the limits of an insurance contract.

The industry is at fault to a degree on this. We are not dealing with sophisticated buyers, but at times insurers seem to treat consumers that way.

One thing is obvious—personal lines and small-commercial buyers, the least sophisticated buyers, need to be educated better about the limits of their insurance policy. They also need to better understand the benefits if they seek more protection.

A better-educated consumer is a better buyer. Maybe that would mean more sales in the long run for insurers.

Nevertheless, it is apparent that consumers are not hearing the message despite all the warnings in big, bold type on the declaration page.

This would be a prime opportunity for the industry to coalesce around a single message to buyers that there are limits to what an insurance policy will cover.

Here is the perfect role for the Federal Insurance Office, one the industry should support, to develop a cohesive education program that won't leave consumers guessing any longer about what their insurance program covers in light of the next catastrophe.

Special Reports /

Are Policyholders Adequately Educated?

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