Economic Turmoil Forcing Consumers To Trim Coverages
BY MARK E. RUQUET
National Underwriter News
December 15, 2008
A national survey concluded that while many consumers are making changes to their insurance policies in an effort to save money, they may not be fully informed about the consequences of those changes to their risk exposure.
The survey, sponsored by the independent agent branding campaign Trusted Choice and the Independent Insurance Agents & Brokers of America, found that close to 39 million households in the United States either have or are considering making changes to their insurance plans. Of those surveyed, 60 percent blamed the nation's economy for their decision.
The survey of 1,021 households was conducted via telephone by International Communications Research, an independent research company based in Media, Pa. The survey has an error factor of plus or minus 3 percent.
The survey found that 18 percent of homeowners (more than 30 million Americans) have considered reducing their auto, home, life or health insurance coverage in the last few months. What's more, about 24 million homeowners actually made changes to an insurance policy within the last year.
Trusted Choice advised consumers that before making changes in their insurance they should talk to their independent agent and consider how those changes could adversely expose them to increased financial risk they may not be able to afford.
Fifty-four percent of homeowners believed their homeowners policy would cover them if they vacated their home while trying to sell--a coverage typically excluded under a homeowners policy.
For homeowners who decide to rent their homes, 30 percent thought their policies covered them if the home was rented temporarily, while 53 percent thought they were not covered and 16 percent did not know.
Trusted Choice noted that, in fact, coverage depends upon the policy. Most of the time temporary tenants are covered, but there are limits that should be reviewed with an agent.
"It is imperative that homeowners understand their insurance needs and rights, but this survey shows that many don't," noted Robert A. Rusbuldt, president and chief executive officer of IIABA. "We advise they consult with their Trusted Choice independent insurance agent to discuss their current policies and to ask questions when faced with difficult or temporary housing situations."
Madelyn Flannagan, IIABA vice president for education and research, noted, "In tough economic times, people look for ways to trim household expenses, but cutting back on insurance coverage may leave them open to even bigger financial hardship."
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