Home insurance policies are pretty much the same, and carriers compete on the basis of price and service—right?
Believe those two myths and you might wind up paying dearly.
Homeowner policies have important differences that can affect whether claims are paid, according to a study scheduled to be published early next year in the University of Chicago Law Review. The problem is that those differences are poorly understood.
Tips for Selecting the Correct Insurance
- Use a reputable independent agent with access to a range of insurers and coverage options.
- Ask about exclusions and wording differences across policies.
- Ask about coverage for water damage from sewer or pipe problems, and whether damage to the foundation is covered, limited or excluded.
- Ask which items will be paid at “replacement value” versus “actual cash value.”
At least one state Nevada has recently began posting policy forms in October for its 10 largest home and auto insurers. This is a first step in an effort to improve consumers’ ability to comparison-shop for insurance.
For now, many consumers’ best option is to seek out an experienced and reputable insurance agent to cut through all the confusing language, says Amy Bach, who runs United Policyholders, a consumer-advocacy group in San Francisco. The group has long sought to educate consumers on the importance of comparison-shopping “for quality, not just price.”
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