J.D. Power and Associates has released the results of study that indicated that a sizeable percentage of consumers who are in weather disaster-prone regions do not have adequate home insurance coverage.
The United States may be the richest country in the world, but severe weather can still threaten its people and businesses. There are two primary socio-economic issues that impact the amount of economic loss that results from this type of catastrophe. They are: value at risk and population exposure.
The 2011 U.S. National Homeowners Insurance Study showed that even with the large number of disasters that have already occurred in the United States over the summer – especially Hurricane Irene – less than 10 percent of homeowners had the flood before the storms occurred. Among homeowners in the southeastern United States, only a quarter had coverage in case of flooding.
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Senior director of insurance practice Jeremy Bowler from J.D. Power and Associates said that “Unfortunately, the majority of homeowners affected by Hurricane Irene were not covered for flood damage, and many may find their claims denied.” If a homeowner is not sufficiently insured before a disaster occurs, they may not have enough coverage to pay for the expenses that result.
The study determined that among those who do have insurance policies, less than 20 percent are sufficiently insured to rebuild their home. The insurance industry is advising people to review their policies and make certain that they are adequately covered before they continue with their current plan or purchase a new one.
Homeowners are able to obtain affordable flood protection from the National Flood Insurance Program (NFIP), which will cover up to $250,000 in damage to the building and its contents, and with a deductible as low as $500. Many of the leading insurance companies offer NFIP policies and will perform flood claim assessments as they receive fees from the government for selling the policies on their behalf.