The Importance of Homeowners Insurance
According to a study conducted by Fluent, a brand marketing and advertising technology firm, “about half of all Americans say they have homeowners or renters insurance. Of those polled, only 33 percent of renters claimed to have insurance.”
Licensed insurance counselor and agency owner of Lansing Farmers Insurance, Greg White, spoke about a recent trend in the insurance industry – lack of coverage.
The most underserved market right now are individuals that rent,” he said, “and they don’t have insurance.”
The reasons for this shocking trend are usually two-fold. White mentioned the most common misconception is that the renter believes the landlord has taken care of insurance. Secondly, the renter believes they don’t have enough valuable things to ensure.
White discussed the findings mentioned at a Lansing property management meeting in January. “For the city of Lansing, almost 39 percent of the residential properties are non-owner occupied, which is the demographic trend,” he said. “A lot of people, since they have changed the lending rules, can’t get a mortgage. A lot of millennials don’t want the burden of a mortgage — they want flexibility.”
Farmers Insurance has been in existence for 110 years, but the recent trend of home insurance has even surprised this insurance veteran of 35 years.
“I never thought I would see the trend of homeowners not having insurance,” White said. “Typically they would have home insurance if they had a mortgage – the mortgage company requires it, but there’s no law that requires them to have home insurance like there is to have car insurance.”
Another misconception is that renters believe they can’t afford insurance — but a basic $5,000 rental insurance policy for an apartment can cost just $150 a year, according to White.
Even if property owners have home insurance, agents argue the importance of regularly keeping inventory of valuables, and reviewing your policy coverage.
“I think a lot of people kind of take it for granted, that they don’t review it or update it. That’s not only important for the dwelling coverage – the structure – it’s really important for the contents coverage,” said White.
Insurance policies often become lacking because of inconsistent maintenance. Failure to update your inventory, after an expensive wedding present or family heirlooms left in wills can result in possessions neither appraised nor covered under your plan.
“It’s a maintenance thing,” White said. “There’s an adage in our business — like with the inventory; you take the time to do it and you never use it.”
After significant life events such as a loss of a family member, getting married or moving in with a significant other, starting a business, or buying vacant land, the recommended action is to review your insurance policy.
Something else to be cautious about is buying insurance online.
“In Michigan, the state has basic policy language that everybody has to start with,” said White. “Above that, companies can increase limits or add policy language to be competitive or to service a specific niche or market they’re trying to target. So when people switch companies, just because they think they’re saving money it doesn’t mean they’re getting the same coverage.”
The Farmers Insurance agent mentioned their agency receives phone calls regularly from victims of identity theft or fraud.
“Every month, we hear about somebody buying insurance online,” he noted. They’ve googled renter’s insurance and all of these things popped up, and they emailed somebody or called somebody and gave them their information and their credit card and they never got anything. Then they finally find out they’re a victim of identity theft.”
Most would argue loss of identity is not worth an attempt to save $20 per month on insurance, and a face-to-face relationship with an insurance professional can deter fraud.
The risk management trend continues to grow in the insurance world, now offering policies to prevent and help recover identity theft and the costs associated with fixing credit scores.
Cyber crime is the second biggest exposure, according to White, behind liability claims like slip and falls. Individuals often suffer far more of a percentage loss versus companies when dealing with cyber and identity crimes, but insurance can reimburse your expenses to correct credit and securing your identity.
Another recent advancement is the need for coverage for Über drivers, which is not covered by car insurance. Just like personal businesses which are operated out of a home, Über drivers are contracted employers, and additional coverage is available.
Though most business owners are covered by insurance, keeping policies up to date is crucial.
“The more household members that can be part of that conversation, the better,” he said. Keeping family members up to date and all on the same page makes for a more streamlined process.
While you may never have to use your inventory for insurance claims, it is helpful in estate planning. Though denial is a major component of non-insured homeowners and renters, unforeseen disasters can destroy homes, belongings and more within a matter of moments. Being prepared for those things is crucial.
White spoke about his role as an agent and when bad things happen to good people.
“You get to a person’s house and they’re in shock,” he said. “I laugh with them, I cry with them, I pray with them. Empathy is a blessing and a curse. I’m glad to be available to help people where I can.”