As the nation braces for the hurricanes, wildfires, tornadoes and floods that accompany the spring and summer disaster season, nearly half of U.S. consumers are insufficiently prepared — in terms of their insurance coverage — to deal with potential losses, according to new research by the National Association of Insurance Commissioners (NAIC).

The NAIC’s national survey revealed a significant lack of preparedness among consumers in documenting their belongings. Nearly half — 48 percent — said they did not have an inventory of their possessions. Of those consumers who reported having a checklist, 32 percent had not taken any pictures and 58 percent had no receipts validating the cost of their possessions. In addition, 44 percent of respondents acknowledged that they had not stored their inventory in a remote location.

The NAIC survey also found that the majority of consumers do not have the coverage necessary to protect themselves from specific types of losses that are not reimbursed under standard policies:

• 69 percent do not have earthquake insurance.
• 65 percent do not have flood insurance.
• 56 percent do not have insurance for a water line break.
• 55 percent do not have insurance for a sewer line break.

The NAIC survey also found that 43 percent of U.S. adults with homeowners or renter’s insurance owned policies that provided a replacement cost payout. Of the remaining consumers, 27 percent indicated their policies insured their homes for the actual cash value, while another 28 percent did not know which type of coverage they purchased.

Know About Insurance Before Disaster Strikes (NAIC 5/13/08)

June 3, 2008