Why educating consumers on coverage is necessary

Risk. It’s probably the most fundamental word in insurance.

Nothing is decided without assessing risk. Actuaries use models and statistics to gauge the risk in offering an insurance policy, which determines the premiums consumers pay. Insurance companies are covering their bets.

But are we encouraging our customers to be as proactive about risk as we are?

According to Bankrate’s 2022 annual True Cost of Auto Insurance report, the average consumer pays $1,771 annually on car insurance. More in New York and Florida, less in Maine. Bankrate estimates the average cost of homeowner insurance at $1,383 per year for $250,000 for dwelling coverage. 

Premiums are expected to rise even further as insurers battle higher costs across the board. With good reason. The U.S. was hit with 15 separate billion-dollar weather and climate disasters in 2022, according to the National Centers for Environmental Information. We only need to see the images from Hurricane Ian’s destruction in Florida last September to see how quickly life changed for those residents.

That’s why we are focused on making sure our customers understand what their policies cover. As an industry focused so heavily on risk, we want to pass along our expertise to consumers, so they are not caught by surprise when an incident occurs, either. 

This push to educate becomes even more critical when you look at the way American’s feel about their insurance policies. The results of a Harris Poll on behalf of VIU by HUB  surveying more than 1,600 Americans with auto/homeowners insurance reveals that nearly 60% of respondents are concerned about their homeowners and/or auto insurance coverage not being enough due to the changing economy.

Additionally, of those who have made a claim on their insurance policy in the past five years, 40% had an event where their policy did not cover their claim as they had expected. And, 59% of homeowners and/or auto policyowners are concerned that their home/auto insurance coverage may not be enough due to the changing economy (e.g., inflation).

I can’t think of another industry where consumers have such confidence in the product yet can’t tell you exactly what they are getting. Personal insurance shouldn’t be a mystery. The stakes are too high for consumers not to be fully immersed in the details of their insurance policies.

I look at it this way. Each year we are encouraged to schedule a physical to ensure we are keeping tabs on our health. We should encourage consumers to take the same approach with auto and home insurance, especially if they live in areas prone to natural disasters. 

As consumers increasingly make transactions in the digital space, let’s leverage the technology we have to better meet their needs and lower their risk.