While homeowners insurance is designed to protect property from costly disasters, few homeowners actually understand what types of protection their policy offers them.
Only 3 in 10 homeowners (30%) said they feel confident they know what their homeowners insurance plan covers, according to a new survey from insurance provider Plymouth Rock Home Assurance.
As a result, some homeowners may experience a costly emergency only to discover they have to foot the entire bill themselves.
Homeowners do initial research
When it comes to shopping for homeowners insurance, consumers start off with good intentions:
- 76% wanted to protect their investment in property and belongings
- 69% wanted the peace of mind of knowing their property and belongings are covered
- 52% said their mortgage lender requires it
- 35% wanted to have personal liability protection in order to protect themselves in a lawsuit
A majority of homeowners also do their research, recognizing that homeowners insurance providers offer a multitude of different coverage options and rates. In fact, 68% of respondents compared insurance carriers when they last bought a homeowners insurance policy. And nearly 9 in 10 respondents (89%) said they didn’t choose the first insurance carrier they came across when researching their options.
The No. 1 factor homeowners looked at was the price of the policy, followed by the quality of the service, and then coverage options. For those who are most interested in finding the cheapest policy, it’s important to know that you don’t have to give up quality to receive affordable coverage.
Consumers were also interested in the background of the insurance provider. Sixty-one percent of respondents said they considered it either “extremely” or “very” important for a homeowners insurance provider to have been in business for “a while,” though the survey didn’t specify a certain period of time.
Attention can flag after picking a policy
While homeowners are diligent about researching homeowners insurance providers when they first get a policy, many don’t take into consideration the fact that things can change. For example, a policy that might be sufficient for a first-time homebuyer may not be enough for that same family 10 years later when they own more expensive possessions.
However, half of respondents said they had not shopped for homeowners insurance in the past three years, meaning they would be unaware of opportunities to save money with a less expensive policy.
Consumers may also be missing out on saving money because many don’t know how much they pay for homeowners insurance in the first place. According to the survey, 1 in 5 homeowners didn’t know the price tag for their current policy.
One reason some homeowners may be unaware of the cost is because many consumers pay for their home insurance by adding the cost to their mortgage payments and letting their mortgage lender pay the actual bill.
Among homeowners who pay for homeowners insurance as part of their mortgage payment, 75% know how much their policy costs. However, among homeowners who pay for homeowners insurance separately from their mortgage payment, 89% know how much they pay.
Methodology: Plymouth Rock commissioned polling firm Researchscape to survey 1,000 homeowners in January 2020. Note that the survey took place before the COVID-19 pandemic.