Too Many Americans Are Mistaken About Insurance: Surveys Say

Flood and homeowners insurance seem to cause the most confusion, polls by Trusted Choice and Insurify reveal.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

Featured in

media logomedia logomedia logo
Chris Schafer
Edited byChris Schafer
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

Featured in

media logomedia logomedia logomedia logo
John Leach
Reviewed byJohn Leach
Photo of an Insurify author
John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

Featured in

media logo

Published July 2, 2024 at 12:00 PM PDT | Reading time: 2 minutes

Why you can trust Insurify: Comparing accurate insurance quotes should never put you at risk of spam. We earn an agent commission only if you buy a policy based on our quotes. Our editorial team follows a rigorous set of editorial standards and operates independently from our insurance partners. Learn more.

Many of people’s most valuable possessions require insurance — including homes and vehicles. And 86% of Americans think they understand how their policies work and what they cover, according to a survey by Trusted Choice, which represents the Independent Insurance Agents & Brokers of America Inc. (the Big “I”).

But an alarming number don’t understand that homeowners insurance doesn’t cover flooding. And roughly half of those the Big “I” polled are mistaken about factors that affect their car insurance costs.

Flood insurance confusion

Standard homeowners insurance doesn’t cover flooding. Yet 56% of those the Big “I” surveyed didn’t know that. Those results echo findings from an Insurify report, which found 60% of homeowners didn’t have flood insurance and 13% believed their standard home policy would pay for flood damage.

More than 9% of all U.S. properties — including homes and businesses — are at risk of experiencing at least one flood of a depth of one foot or more every year, according to the Congressional Budget Office. Since 1998, 99% of U.S. counties have experienced a flood, with more than 40% of flood insurance claims coming from areas considered at lower risk for flooding, FEMA says.

“We know that flooding is common and costly in the U.S.,” says Cassie Sheets, a data journalist and author of Insurify’s report. “And it’s becoming even more common and expensive. FEMA data shows that National Flood Insurance claims soared 660% in the first two decades of the 21st century. It’s becoming more likely that people who think they’ll never need flood insurance will experience a weather event that makes them regret not having it.”

Mistaken beliefs about home insurance

The price of building materials in an area can affect home insurance costs significantly. As more frequent severe weather events cause more damage to homes, leading to more home insurance claims, rising material costs make claims more expensive.

Reconstruction costs increased by 4.6% from April 2023 to April 2024, according to insurance analytics company Verisk.

And while homeowners insurance and flood insurance will typically cover the materials cost to repair damage from covered events, they won’t pay for materials or fixtures for voluntary home renovation. Yet 70% of those the Big “I” surveyed thought they would.

In addition, standard home and flood policies will typically pay to replace only personal property if homeowners can provide a reliable list of major household items lost or damaged in a covered situation. But 46% of survey respondents either didn’t have or were unsure if they had an inventory of their personal property.

Auto insurance misconceptions

Washington, D.C., and every state but New Hampshire require drivers to have at least a minimum amount of liability coverage. Yet many drivers don’t understand how car insurance works or the factors that can affect their insurance costs, the Big “I” survey reveals.

More than half didn’t know that their standard auto insurance policies wouldn’t cover them if they used their vehicle for business purposes. And 57% didn’t know that a parking ticket wouldn’t affect their auto insurance premiums.

What’s next: Building consumer knowledge

“The good news is, consumers can find a lot of insurance information easily available online,” says Sheets. “Insurance companies, marketplaces, and agents all offer educational content that can help policyholders better understand the protection their insurance gives them — and what it doesn’t cover.”

Agents are also a source of information, says Kevin Brandt, executive director of Trusted Choice.

“With their unbiased guidance and personalized approach, [independent agents] empower individuals to navigate policies with clarity and confidence, ensuring they truly understand their coverage and make informed decisions,” Brandt stated in a release announcing the survey results.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content

Evelyn Pimplaskar is Insurify’s director of content. With 30-plus years in content creation – including 10 years specializing in personal finance – Evelyn’s done everything from covering volatile local elections as a beat reporter to building fintech content libraries from the ground up.

Before joining Insurify, she was editor-in-chief at Credible, where she launched and developed the lending marketplace’s media partnership’s content initiative and managed the restructuring of the editorial team to enhance content production efficiency. Formerly, as tax editor for Credit Karma, Evelyn built a library of more than 300 educational articles on federal and state taxes, achieving triple-digit year-over-year growth in e-files from organic search.

Her early career included work as a content marketer, vice president and managing officer of a boutique public relations agency, chief copy editor for 14 weekly Forbes publications, reporting for large and mid-sized daily newspapers, and freelancing for the Associated Press.

Evelyn is passionate about creating personal finance content that distills complex topics into relatable, easy-to-understand stories. She believes great content helps empower readers with the information they need to make important personal finance decisions.

Chris Schafer
Edited byChris SchaferSenior Editor
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

Featured in

media logomedia logomedia logomedia logo
John Leach
Reviewed byJohn LeachSenior Insurance Copy Editor
Photo of an Insurify author
John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

Featured in

media logo