Useful Insurance Information

June 4, 2008

At the same time that America is getting prepared to deal with upcoming tornadoes, floods, hurricanes, and wildfires that some to go along with the spring and summer, it is reported that as many as half of U.S. consumers are insufficiently prepared, with regard to having ample insurance coverage, so as to deal with the potential losses. This is the result of research by the National Association of Insurance Commissioners (NAIC).

From the survey it has been learned that Americans are significantly unprepared According to the NAIC's national survey there is a major lack of preparedness, for example, among consumers when it comes to documenting their belongings. In the survey it was reported that as many as half, or 48 percent, report not having an inventory of their possessions. Thirty percent of those who reported having a checklist, said that they had not taken any pictures while 58 percent reported having no receipts to validate the cost of their possessions. Of those who did report having made an inventory, 44 percent acknowledged that they do not keep their inventory in a separate location.

Sandy Praeger, the NAIC President and the Kansas Insurance Commissioner, has said that it is helpful to keep a comprehensive list of your belongings along with their value. This helps in the case of making an insurance claim. One of the most effective methods for preparing for a disaster is to create an inventory and to store it in a safe place, away from home, that you can take to help protect yourself and your financial future.

The survey also reported that 43 percent of U.S. adults who have homeowners or renter's insurance, have policies that provide a replacement cost payout. Twenty-seven percent of those surveyed report having insured their homes for the actual cash value, and another 28 percent report not having knowledge of which type of coverage they bought.

The amount necessary to rebuild or repair a damaged home is the actual cash value, along with its contents following depreciation. Replacement cost is the amount it would take to replace or rebuild a home or to repair any damages with materials of a comparable kind and quality, with no deducting for depreciation.

Because many people do not take into consideration depreciation, they are not able to recover after a disaster. Consumers need to appreciate this and the implications of purchasing an actual cash value policy as opposed to replacement cost insurance. Prager says that if there is a major disaster, this difference can mean thousands of dollars.