NAIC: 59% Homeowners at Risk of Property Loss

Posted by Benji Riggins on May 29, 2012 under Insurance News | Be the First to Comment

According to a NAIC report, thousands of homeowners are cleaning up and filing insurance claims following an outbreak of devastating tornadoes across the U.S., but are those possessions properly protected to the fullest extent?

According to the February 2012 survey included in the report identified above from the National Association of Insurance Commissioners (NAIC), more than half (59%) of Americans don’t have a home inventory of their possessions, putting them at risk for inadequate home insurance coverage, should severe weather strike.

The recent survey showed that 59 percent of consumers have not made a list or inventory of their possessions. After a tornado or hurricane strikes, water and wind damage can destroy any conventional shoebox system of storing receipts and owner’s manuals.

But even for those individuals with a home possessions inventory some do not have a comprehensive enough system to be reimbursed for storm losses. The survey showed that 48 percent do not have receipts; 27 percent do not have photos of their property; and 28 percent do not have a back-up copy of the inventory outside the home. These are essential to claiming client’s entire losses. Furthermore, 59 percent of people with inventories have not updated their inventories in more than a year, meaning new purchases and gifts may not be covered.

“Violent weather events affected approximately 80 percent of the nation’s population over the past six years. These storms have left widespread destruction in their wake,” says Kevin M. McCarty, NAIC President and Florida Insurance Commissioner. “Creating a detailed inventory of your possessions is one the best ways to ensure you have the right amount of homeowners or renters insurance for you and your family, he continued.”

Coverage for Storm Losses

Before severe weather strikes, consumers can use their inventory to evaluate their coverage and determine if they need to update their policies. It’s important to know that how much is reimbursed varies greatly from policy to policy. On average, home contents are reimbursed only up to 50 percent of the home’s insured value, i.e., $50,000 to replace the contents of a home insured for $100,000. Of course, home inventories also help in the case of home burglaries losses when items are stolen.

Contents coverage includes replacing a home’s furnishings and the insureds clothing and other possessions. The standard homeowners policy would cover the purchase price less depreciation applied to those items. Under a policy with replacement cost coverage insured’s are covered for the cost to replace items.
Contents replacement coverage includes:
•Clothing, furniture, and electronic equipment,
•Portable and window air conditioners,
•Portable microwaves and dishwashers,
•Carpeting that is not already included in property coverage, and
•Clothing washers and dryers.

Home Inventory Process Assistance

So who can your clients turn to in accomplishing this important documentation? They can set up their own database and make a home video recording but for many this process seems time-consuming. Here are a list of entities available for collaboration with agents and brokers to help make this process easy for their clients:
•KC Home Inventory
•Hobson Inventory

These documentation service providers prepare complete and thorough documentation of your personal property to equip clients in the event they need to file an insurance claim. The documentation is designed to maximize claim reimbursement, make the claim process less difficult, and expedite the settlement.

In addition the NAIC has an app available for smart phone users. The NAIC myHOME application makes it easier for consumers to document their valuables, update their inventories and store the information for easy access after a disaster. The app is free and available for both iPhone® and Android® smart phone users.

By Michael Meulemans, Guide