Homeowners Insurance Perception Problem – How Contents Options Can Help

Customer satisfaction with homeowners insurance policies is at an all time low according to J.D. Power and Associates 2010 U.S. National Homeowners Insurance Study. According to the study, 50% of customers don’t have a clear understanding of the type of insurance coverage or even how much coverage they have on their home. This lack of understanding creates a perception problem, especially in a down economy. Homeowners are watching their home values declining and wondering why they their premiums remain unchanged.

These findings demonstrate that carriers, brokers and agents need to do a better job of educating consumers about homeowners insurance. Take auto insurance as an example. Television advertising alone has gone a long way toward educating consumers on the types of coverage available and the customer service commitment carriers have made to help people choose the options that best meet their needs.

Carriers need to do the same with homeowners insurance, and contents coverage options are a great place to start. Instead of automatically underwriting contents as a percentage of the structural value – the current standard operating procedure for many carriers – insurance providers should offer contents coverage options that reflect the true value of the insureds possessions. This will allow brokers and agents to make contents part of the conversation early in the purchasing process so that consumers will have a clearer understanding of the structural and contents coverage they’re getting.

It’s a win-win for everyone. Carriers diversify their homeowners insurance offerings, providing opportunities to customize coverage and up-sell specialty contents coverage for high net worth individuals. Brokers and agents become a knowledgeable resource for consumers, helping them select the best coverage that suits their profile. And consumers get the peace of mind of having the right level of coverage, allaying concerns that they’re paying either too much or are underinsured.

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