Insurance agents are worried about the value of policy throughout the state
Insurance agents in Alabama have begun expressing concerns regarding the depreciation in the value of policies in the state’s wind pool. Alabama insurance agents are beginning to suggest that consumers are beginning to gravitate toward policies that are inexpensive, but have little to no ability to cover the costs associated with recovering from a major natural disaster. As such, consumers are facing a significant degree of financial risk which may also be being felt by insurance companies.
Lack of awareness may be one of the most problematic issues in the insurance market
Awareness may be the most problematic issue. According to insurance agents, most people do not understand that their insurance policies do not provide coverage for the full range of damage that could be caused by a disaster. Typically, when a natural disaster strikes, many consumers are surprised to learn that their policies will not cover certain costs associated with recovery.
_________________________Random Quotes to Remember ~ “The best investment is in the tools of one’s own trade.” – Benjamin Franklin
State-run insurer sees the majority of policies based on the cash value of possessions
The Alabama Insurance Underwriting Association, which accounts for the majority of the state’s wind pool, claims that 91% of its policies are settled based on the cash value of a policyholder’s possessions. This means that the amount of money that is paid by insurance companies in claims is based on the cash value of a particular item. This value tends to fall over time, which could leave consumers at significant financial risk if they become the victim of natural disasters. This is somewhat beneficial for insurance companies, however, as it reduces their exposure to financial risks.
Many consumers are not sure about what their homeowners insurance policies do and do not cover
A lack of awareness about what a policy does and does not cover is a significant problem among consumers. Many people believe that their homeowners insurance policies offer coverage for all the damage that can be caused by a natural disaster, but this is not the case. Flood damage, for instance, is not covered by a conventional homeowners insurance policy. In some states, insurers do not offer protection against the damage caused by wind storms and hurricanes.