Category Archives: Homeowners Insurance

Homeowners Insurance: Customer Satisfaction Increases

As 2012 appears to be continuing the trend of heavy thunderstorm losses (hail and tornadoes) seen in 2011, the just-released 2012 U.S. Property Claims Satisfaction Study from J.D. Power and Associates makes for a timely read.

The study, which measures customer claims experiences based on homeowners claims filed during 2011, found that overall satisfaction in 2012 improves to 833 on a 1,000-point scale, an increase of 10 points from last year’s study.

The improvement comes despite the record number of storm losses seen in 2011, when there were 99 weather-related disasters in the U.S., 14 of which totaled more than $1 billion in damages each, according to the Insurance Information Institute (I.I.I.).

In a press release, Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates, says:

A period of tremendous volatility in the industry, caused by a large number of devastating storms, led us to anticipate that satisfaction would decline, but that clearly was not the case.†

And:

The industry as a whole did well in not only handling the day-to-day claims, but also the large volume of claims associated with those major events.†

Other key takeaways from the study, include the fact that high wind claims, which include tornado and hurricane damage, accounted for 33 percent of all claims filed, an increase from 21 percent in last year’s study.

Yet, among those who filed a claim for high wind damage, satisfaction remained stable, relatively unchanged with last year.

Claims experience by region shows mixed results, however. For example, satisfaction in the South Atlantic and Northeast regions, both of which had increase in high wind claims due to hurricanes in 2011, improved 36 points and 18 points respectively on the prior year’s study.

In contrast, overall satisfaction the East North Central Region, which also had an increase in high wind claims due to tornado damage, satisfaction declined by 14 points. The West South Central region which saw an increase in hail-related claims also saw an eight-point drop in satisfaction year over year.

Not surprisingly, the study finds that a positive claims experience fosters significantly higher long-term loyalty among claimants, while a negative claims experience may cause claimants to be more likely to switch insurers.

Check out I.I.I. facts and statistics on homeowners insurance and tips on how to file a homeowners claim.

Texas Tornadoes and Hail

As well as strong winds and heavy rains, hail – ranging from pea to baseball size – was a feature of the massive tornadoes that touched down in the Dallas Fort Worth area yesterday.

Specifically, the Dallas-Fort Worth international airport reported that more than 100 aircraft were damaged by hail, according to CNN.

Hail causes about $1 billion in damage to crops and property each year, according to the National Oceanic Atmospheric Administration (NOAA).

Pea size hail measures an estimated  ¼ inch in diameter, while baseball size hail would measure about 2  ¾ inches.

The Insurance Information Institute (I.I.I.) reminds us that hail damage is covered under standard homeowners insurance. It is also covered under your auto policy provided you have comprehensive coverage.

Some insurers may have special deductibles in hail prone areas, to help keep insurance premiums at affordable levels.

Physical damage to aircraft as a result of hail would be covered under a hull insurance policy.

The I.I.I. reports there were over 9,000 major hail storms in 2010, according to statistics from NOAA’s Severe Storms database. Texas had the largest number of severe hail events in 2010, followed by Kansas, Missouri, Nebraska and Oklahoma.

Learn  how  to protect your home from hail in this I.I.I. video:

Customer Satisfaction With Homeowners Insurance

The just released J.D. Power and Associates 2011 U.S. National Homeowners Insurance Study contains a number of interesting findings, but a couple of key takeaways really caught our attention.

For example, homeowners who carry sufficient insurance coverage to fully rebuild their homes in the event of a total loss are more satisfied with their insurer than those that don’t, the study found.

Approximately 16 percent of homeowners insurance policyholders indicate they carry less coverage than would be required to fully rebuild their home in the event of a total loss.

Among those policyholders, satisfaction averages 739 on a 1,000 point scale in 2011 – more than 40 points lower than among policyholders who say they have sufficient coverage.

J.D. Power notes that it is key for homeowners to ensure that their insurance coverage is sufficient before a disaster strikes.

While many homeowners may not give much thought to their insurance under normal circumstances, the moment they have to file a claim, the value of coverage becomes realized.

The study found  that customers who have filed a claim tend to be more knowledgeable about their policies – and also more satisfied – than those who haven’t had a claims experience.

Overall satisfaction with homeowners insurance companies averages 769 in 2011 – improving by 19 points from 2010, according to the study. While satisfaction improved in all five factors, the greatest gain was in the interaction factor.

This year’s study is based on responses from more than 9,100 homeowners insurance customers, fielded between April and July 2011.

Check out this I.I.I. video for tips on making sure you are  adequately insured.

Check out I.I.I. facts and stats on homeowners insurance.

Are Fallen Trees Covered By Insurance?

As clean up efforts get underway on the U.S. East Coast and in the Northeast following Hurricane Irene,  one question on many peoples’ minds is whether their insurance covers fallen trees.

The good news is that if a tree hits a home or other insured structure due to wind, standard homeowners policies provide coverage for the damage the tree does to the structure and the contents in it.

It does not matter whether or not you own the tree. If it lands on your home, you should file a claim with your insurance company, the I.I.I. says.

If a tree hits an insured structure, such as your house or garage, there is also coverage for the cost of removing the tree, generally up to about $500 to $1,000, depending on the insurer and the type of policy purchased.

The I.I.I.’s Jeanne Salvatore has the answers to your fallen tree questions in this video:

Riots And Insurance

Riots in London and other major cities across the United Kingdom have left many individuals and businesses with damaged or destroyed property.

The latest from the Association of British Insurers (ABI) puts the estimated insured losses from the urban unrest at well over  £100 million ($163 million). Check out this Business Insurance article for more details.

Watching the destruction unfold online and on TV I had to wonder, if a similar outbreak were to occur near my U.S. home, would  I be covered?

The good news is that standard homeowners insurance policies generally cover a wide range of potential disasters, including fire, riot or civil commotion, and vandalism or malicious mischief. This I.I.I. chart lists what type of disasters are covered.

Of course, it’s always best to check your individual policy for coverage details and exclusions.

As for U.S. businesses, commercial policies generally cover riot-related property damage.

When it comes to business interruption coverage, insurance will compensate you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. However, if a business is forced to close early due to a city-imposed curfew, business interruption coverage would not apply for the lost income.

While rioting is rare, when it does occur, the damages can be costly to both people and property. The 1992 Los Angeles riots in the wake of the Rodney King verdict caused some $775 million in insured losses and still rank among the largest U.S. manmade disaster losses.

It’s interesting to note that U.S. property insurers of last resort, also known as FAIR plans, were born out of legislation passed by Congress following the 1967 urban riots.

More on the history of property insurance pools and riots can be found in the I.I.I. issues update on Urban Insurance.

What’s in your house?

If your home is ever burglarized, or burns down, the best way to demonstrate what needs to be replaced is with a home inventory – a record of your valuables, when you purchased them, and what they cost. Your insurer needs this information to properly adjust your claim.

This blogger’s home inventory is in a fireproof lock box. Here, for example, is a picture of the home computers:

Bad blogger!
Find the Zip drive

How old is this photo? That hole in the front of the desktop is for a 3.5-inch floppy disk, a feature now most frequently seen on display at the Smithsonian.

Clearly, the Lynch home inventory needed an update.

Fortunately, we have kids.

Our kids (13 and 9) are at the every-media-object-is-a-toy stage, so Dad has given them a new mission: Photograph everything valuable in the home. And since blogging pays less than, say, running Goldman Sachs, there’s not much to photograph. Then we’ll put it all on the laptop’s hard drive. (The kids are better at downloading and uploading than the old man.)

But that laptop can be stolen. It can be destroyed in a fire. So how do we preserve our home inventory?

Thankfully, as we now say in the I-phone age, “There’s an app for that.”

Or several: The New York Times last week rounded up home inventory apps, including one for $25 that lets you scan in the bar code of items like CDs, books and DVDs – speeding the process considerably.

I.I.I. provides a free online home inventory service. (App is coming soon, I gather.) Basically you sign on, upload pictures of your stuff and fill out the details. A I.I.I. video describing the service is here. And, to get you on your way, here is a good list of what sorts of items end up in most inventories.