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DIFS: Increased Home Values, Rising Supply Costs May Leave Homeowners With Insufficient Insurance Coverage If Disaster Strikes
June 28, 2022
Media Contact: Laura Hall, 517-290-3779, DIFSfirstname.lastname@example.org
Consumer Hotline: 877-999-6442, Michigan.gov/DIFScomplaints
FOR IMMEDIATE RELEASE: June 28, 2022
(LANSING, MICH) For National Insurance Awareness Day, the Michigan Department of Insurance and Financial Services (DIFS) is urging consumers to confirm that their home’s replacement value is adequate in today’s housing market, and to make sure they understand the terms and conditions of their policy, particularly the policy’s deductible, that will apply if disaster strikes their property.
“Home values and building supply prices have increased across the country, and the current coverage provided by your homeowners policy may not be enough to replace or rebuild your home if it is damaged or destroyed,” said DIFS Director Anita Fox. “Though some policies may provide automatic value adjustments, this is a great time to contact your company or agent to discuss your home’s value and to make sure you understand your policy to ensure that it will fully protect you in the event of a loss.”
Homeowners insurance is a contract between a consumer and an insurance company to provide protection for a home. The contract specifies the potential risks, called hazards, that the policy will cover and any applicable policy terms, limitations, exclusions, and policyholder responsibilities. It will also detail things like the premium, deductible, the replacement value of a home, any outbuildings, and any valuable personal property, such as jewelry or collectibles, that may require additional coverage with a personal property endorsement.
In exchange for providing the coverage described in the policy contract, the insurance company will charge the policyholder a premium. Premiums may be billed on a monthly basis, though discounts may be available if consumers elect to pay on an annual or semi-annual basis. The policyholder is also responsible for any relevant deductible, which is a certain amount of money that must be paid out-of-pocket before the insurance company will pay a claim after a loss. For example, a homeowners policy may have a $1,000 deductible, meaning that the insured must pay $1,000 of a covered loss before the company will pay.
“Policy premiums typically decrease when a consumer chooses a higher deductible but choosing a higher deductible may make it more difficult for a family to recover from a disaster,” said Director Fox. “It is important that you have a plan, such as a dedicated emergency fund, for paying your policy deductible or your family could face a severe financial strain if a fire, tornado, or other natural disaster damages your home or possessions.”
For more information and tips on saving for emergencies or other financial goals, visit the DIFS Financial Education website. For additional information on insurance policies, the claims filing process, or to file a complaint against an insurance company or agent, visit Michigan.gov/DIFS or call 877-999-6442, Monday through Friday from 8 a.m. to 5 p.m.
The mission of the Michigan Department of Insurance and Financial Services is to ensure access to safe and secure insurance and financial services fundamental for the opportunity, security, and success of Michigan residents, while fostering economic growth and sustainability in both industries. In addition, the Department provides consumer protection, outreach, and financial literacy and education services to Michigan residents. For more information, visit Michigan.gov/DIFS or follow the Department on Facebook, Twitter, or LinkedIn.