TRAVERSE CITY, MICH., FEB. 18, 2009 – Many Americans are facing financial struggles and considering making changes to their insurance policies, according to a new national survey of homeowners by Trusted Choice® and the Independent Insurance Agents & Brokers of America (the Big “I”). Almost 24 percent of those surveyed, representing about 39 million homeowners, say they have made changes to their insurance coverage because of the troubled economy, leaving them vulnerable to serious financial loss.
Although a large percentage of homeowners are considering finding ways to cut insurance costs, they are also unaware of what their homeowner’s policy covers in the event that they rent their home or must leave the home unattended.
The Trusted Choice® survey found that about 54 percent of homeowners thought their current policies would cover them if they suddenly had to put their home up for sale during the period of time from which they vacated to when the sale was finalized or simply did not know if they would be covered. This number is alarming, especially given the large number of vacant homes across the country caused by the slumping housing market.
The types of losses that are more likely to occur when homes are unoccupied are typically excluded by most homeowners policies. For example, there may be no coverage for vandalism, plumbing leaks, and glass breakage. In addition, eligibility for a homeowners policy requires that the named insured(s) own and occupy the home. If the homeowner(s) no longer reside in the home, many policies may no longer cover damage to the home itself and this coverage gap could extend to a mortgage company. This gap could apply even if a family member or tenant has moved into the home or checks it regularly. Consult with your insurance agent prior to vacating a home and ask about the feasibility of purchasing a homeowner policy specifically designed to protect you if your home is vacant.
TEMPORARILY RENTING YOUR HOME
The Trusted Choice® study found that only 30 percent of homeowners thought their policies covered them if they were to temporarily rent their home. The survey also showed that 53 percent didn’t think they would be covered and 16 percent admitted they didn’t know. The answer is: it depends.
The good news is that, for the most part, you are covered if your tenants are temporary, and it’s not necessary to notify your insurer of the rental situation. However there may be some limitations on certain kinds of property losses if premises are rented, but not a wholesale lack of coverage. For example, there is no coverage for rental of a detached structure on the premises unless it is used as a private garage. Probably most notable, theft coverage is usually suspended for the area occupied by the renter and there is no coverage for damage to the renter’s personal property.
“It is imperative that homeowners understand their insurance needs and rights, but this survey shows that many don’t,” says Patty Stuck, personal insurance specialist of the Ford Insurance Agency in Traverse City, a Trusted Choice® agency. “We advise they consult with their insurance agent to discuss their current policies and to ask questions when faced with difficult or temporary housing situations.”
“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. It’s particularly dangerous to make these decisions without the help of an agent, because, as this research shows, many consumers do not fully understand their coverage,” adds Stuck.
Ford Insurance Agency is a local Trusted Choice® agency that represents multiple insurance companies, so it offers you a variety of personal and business coverage choices and can customize an insurance plan to meet your specialized needs. This firm adheres to a pledge of performance, committing them to providing excellent customer service. You can visit Ford Insurance Agency online at www.fordinsurance.net or call it at 231.941.0450.
The survey was conducted for Trusted Choice® via telephone by International Communications Research (ICR), an independent research company in Media, Pa. Interviews of a nationally representative sample of 1021 households were conducted in November 2008. For more information about ICR, go to www.icrsurvey.com.