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Three out of five homes in the U.S. are underinsured by an average of 20% below full value, according to a citation from the property data aggregator CoreLogic in a 2019 report published by Rutgers Center for Risk and Responsibility. And risk assessment firm AIR Worldwide reports that 34.6% of insurable North American average annual loss (AAL) is uninsured, resulting in an estimated $32.7 billion in unreimbursed cost to policyholders. (Photo: MQ-Illustrations via Adobe Stock) Three out of five homes in the U.S. are underinsured by an average of 20% below full value, according to a citation from the property data aggregator CoreLogic in a 2019 report published by Rutgers Center for Risk and Responsibility. And risk assessment firm AIR Worldwide reports that 34.6% of insurable North American average annual loss (AAL) is uninsured, resulting in an estimated $32.7 billion in unreimbursed cost to policyholders. (Photo: MQ-Illustrations via Adobe Stock)

The insurance industry sells peace of mind. But for many business owners, the events of the past few years have left them feeling anything but tranquil. The COVID-19 crisis and its ongoing fallout have exposed and exacerbated several weaknesses in their insurance coverage. Whether it’s issues with business interruption, the global supply chain, the scourge of ransomware and cybersecurity attacks, wildfires or increasingly severe weather, it’s clear insureds are facing threats from many directions.

The most frightening part is commercial policyholders are often woefully and chronically underinsured, the result of a confluence of drivers. A hardening market means carriers are likely narrowing coverage as rates increase. Buyers have become habituated to shopping for insurance at the lowest cost possible, and agents are hesitant to contradict them. Producers themselves often lack the technical acumen to fully understand the coverages they sell and may bind policies without even reading them. And finally, there’s the complacency that comes with increasing revenues thanks to a hard market (which won’t last forever), and from the fact that client turnover is extremely low. Renewals are, in a very real sense, theirs to lose.

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