Homeowners Lacking on Policy Information

In a recent study performed by HomeInsurance.com, it was found that 54 percent of all homeowners surveyed admitted to know, "not much at all" about their home insurance policies.

"The reason people need to understand their homeowners insurance is because it's the only way to know if you have the right amount of insurance and the right type of insurance," said Carolyn Gorman vice president of the Insurance Information Institute.

According to HomeInsurance.com, it is vital for homeowners to understand their coverage so that they can ensure they are adequately covered in the event of a disaster. Some of the most dangerous aspects of a home insurance policy to be ignored include replacement value, deductibles and covered losses.

Replacement value is listed on your home insurance policy as the value to replace your home in the event that it was completely destroyed.

"So often a homeowner will upgrade their home and never update their home insurance policy. When the listed replacement value is no longer enough to rebuild their home to the new standards, the homeowner is often left underinsured," said Carlos Lagomarsino, CEO of HomeInsurance.com.

Also, when a homeowner is unaware of their home insurance deductibles they are putting themselves in a situation where they may be paying too much for home insurance or even worse, inadequately insuring themselves.

Oftentimes a homeowner will set their deductibles really high or low, depending on their financial ability/inability to cover damages if need be. If their financial situation changes, they often neglect to update their deductible. This can cause a homeowner to pay either an unnecessarily high premium or leave them unprotected with a high deductible they cannot afford to meet in the event of a claim.

Lastly, one of the most poorly understood aspects of homeowners insurance is actual coverage. Homeowners insurance policies can vary in types of coverage but a standard home insurance policy typically covers dwelling, contents, other structures, medical payments, liability and loss of use.

"When talking to homeowners it becomes apparent that many of them are unaware of the limitations of their policies. Some homeowners don't realize that they have liability insurance built into their homeowners insurance. Others think that flood damage is covered," said Lagomarsino.