National Association of Insurance Commissioners issues consumer guidance on using insurance to protect household finances

The National Association of Insurance Commissioners published consumer guidance on how insurance coverage can help manage financial hardship after a disaster or other loss, highlighting practical considerations around deductibles, coverage gaps and policy features that affect out-of-pocket costs. The guidance encourages consumers to confirm they can afford applicable deductibles, noting that certain perils such as named storms, wind, hail and earthquakes may have separate deductibles. It also recommends shopping around for policies and asking about discounts, including for bundling home and auto cover, completing a defensive driving course, maintaining a claims-free record, using vehicles with advanced safety features, or qualifying through an affiliated credit union or association; for homeowners insurance, examples include discounts for smoke detectors, burglar alarms, monitored security systems, deadbolt locks and sprinkler systems. It stresses reviewing what is and is not covered, pointing out that standard homeowners policies typically do not cover flood damage and may require separate flood insurance or add-on coverage, and citing FEMA’s estimate that one inch of water in a home can cause up to USD 25,000 in damage; it also notes that homeowners and renters policies typically do not cover sewage backups, water main breaks or earthquake damage. Additional topics include considering life insurance, understanding differences between actual cash value and replacement cost coverage, and taking low-cost mitigation steps to reduce severe weather risk and future claims.