A survey by insurance regulators has found U.S. homeowners continue to be unaware of how much coverage insurance policies on their home provide.
The poll in May by the National Association of Insurance Commissioners said policyholders were ignorant because of confusion about possible damages that policies cover as well as an incorrect belief that houses are insured for cash value.
Despite continuing news of major legal disputes over flood damage coverage in the wake of the 2005 hurricane season, the NAIC survey found 33 percent of U.S. heads of households mistakenly believe flood damage is covered by standard property and liability policies.
The report noted that while flood insurance policies are available from the federal government's National Flood Insurance Program and are frequently sold by agents that provide homeowner policies, other perils not typically covered include earthquakes, water line breaks, termites and mold.
The phone poll, which NAIC said had contacted 1,000 persons, found consumers also lack information about the ways in which their homes are insured.
Twenty-four percent of homeowners indicated that their homes were insured for actual cash value, 64 percent said their policies covered replacement costs, and 12 percent revealed that they did not know what type of insurance they purchased.
"It's important that consumers understand this distinction," said Walter Bell, NAIC president and Alabama insurance commissioner, adding that "many homeowners could be seriously harmed financially by misunderstandings about their insurance."
The NAIC provides more information on the topic online at www.InsureUonline.com.
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