This doesn’t surprise me much. The National Association of Insurance Commissioners did a survey of homeowner beliefs about what their policies cover, and found huge percentages have mistaken ideas. Here’s one example from the NAIC report:
The survey found that 33 percent of U.S. heads of household, who own a home and have homeowners insurance, incorrectly believe flood damages would be covered by a standard homeowners or property and liability policy, despite extensive media coverage on Hurricane Katrina victims whose claims were denied because they lacked flood insurance.
Here are some other findings:
68 percent think vehicles such as cars, boats and motorcycles stolen from or damaged on their property are covered. 51 percent think damages from a break in the water line on their property supplying water to their home are covered. 37 percent think damages due to a break in the sewer line on their property that connects to their municipal sewer system are covered. 35 percent think damages from earthquakes are covered. 34 percent think damages from mold are covered. 31 percent think damages from termites or other infestation are covered. 22 percent think pets stolen from or injured on their property are covered.
Actually, I’m surprised these percentages aren’t higher. If you would have asked me what my homeowners policy covered before I went to law school and became an insurance lawyer, I probably would have said all of the above, and then some. I doubt that I ever really read an insurance policy before I started doing coverage work, and I’ll bet that puts me in the company of many, many Americans.