Many homeowners don’t. The Insurance Information Institute surveyed homeowners to find out how well people understand their policies. Here are some of the findings of the III’s 2016 Consumer Insurance Survey.
Does homeowners insurance include flood coverage?
Forty-three percent of homeowners mistakenly believe that damage from heavy rain flooding is covered under their standard homeowners insurance policy. To cover this peril, you would need to buy a separate flood insurance policy. This false assumption could be part of the reason only 12 percent of homeowners also purchase flood insurance. There was somewhat more awareness of the
importance of buying flood insurance in 2016 than in 2010, when only 10 percent of homeowners purchased the coverage.
Does homeowners insurance include earthquake coverage?
On average the survey also found that 29 percent of homeowners incorrectly think standard homeowners policies provide coverage for earthquake damage, including earth movement from sinkholes (31%), mudslides (24%) and landslides (23%). Though seismic activity is perceived to be more prevalent in the West, earthquake activity has increased in other parts of the U.S. in recent years. Oklahoma’s largest earthquake in modern times, at magnitude 5.8, occurred on September 3, 2016. As in the Oklahoma instance, underground wastewater disposal associated with oil and natural gas production is causing increased seismic activity in many places, according the U.S. Geological Survey.
What does homeowners’ insurance cover that you might not be aware of?
While some homeowners think their policies cover things they do not, many are unaware of things their policies do cover:
- 57% don’t know that theft of possessions from your car is covered.
- 46% don’t know a camera stolen on vacation is covered.
- 30% don’t know theft of a child’s laptop while at school is covered.
The point is homeowner policies cover personal belongings stored off premises, though sometimes an insurer will limit the amount to 10% of the personal property limit.
Another homeowner coverage many people are not aware of is damage from things falling from the sky.
- Only 44% know there’s coverage for an airplane or plane debris hitting your home.
- Only 27% know there’s coverage for a meteorite striking your home.
- Just 12% know there’s coverage for injury caused by a falling drone.
Many people also have incorrect notions of what the liability portion of their homeowner policies covers:
- Only 69% know it provides medical payments coverage for someone injured on your property, regardless of fault.
- Only 61% know that it will cover legal defense costs if you’re sued by someone injured on your property.
- Just 54% know that medical payments are covered for a visitor bitten by your dog.
Finally, almost half (48%) of homeowners don’t know that their policy provides additional living expense coverage (ALE) for special living costs you incur when you can’t live in your house because of an insured loss. ALE includes costs for temporary housing, hotel bills, restaurant meals and more.