A Huge Number of Homeowners are Underinsured 

Two-thirds of homeowners in the U.S. are underinsured. They don’t think they are but reality says the are. This conclusion comes from a survey done by Insurance.com. 

The survey found a lot of people expecting their coverage to pay for disaster damages. Their policies — however — contained exclusions for some reconstruction or claims involving total loss. Many think they’re covered for wildfires, earthquakes and flooding when they are not.  

Data gathered by the American Property Casualty Insurance Association (APCIA) fits the Insurance.com survey’s conclusion that two out of three homeowners are likely underinsured. 

The Insurance Information Institute (Triple-I) says just 30% of homeowners have increased coverage to match higher replacement costs. The small number is surprising considering building materials costs and labor have risen 30% in the last five years.  

Underinsured homeowners is an even bigger concern when you look at National Oceanic and Atmospheric Administration (NOAA) data showing 27 weather events with losses over $1 billion in 2024. The loss totals for 2024 hit $182 billion.  

Since 1980 the U.S. alone has seen 341 events of $1 billion or more. The total losses equals $2.915 trillion.  

The most confusion is in coverage for flood losses. A stunning 32.5% of homeowners say they have flood insurance. But they don’t. The National Flood Insurance Program (NFIP) covers just 4% of the homeowners in the U.S.  

Some people — ranging from 40% to 70% —  the states of California, Arizona, Nevada and Texas felt their policies protected them completely from wildfire damages. But when you look at only 30% increasing their coverage to count for replacement cost increases, most are not as covered as they think.  

Source link: Insurance Business America — https://bit.ly/48FMFGK