Document Type
Article
Disciplines
Insurance Law
Abstract
Markets need information, and better information produces better markets. Consumers need information about products’ features, price, and quality to shop effectively. When they have that information, their buying choices spur competition that produces better products with desirable features at lower prices. The market for homeowners insurance provides reasonable information on price but lacks basic information about the features of policies and company quality. Consumers have little access to information about the coverage terms of policies being offered or the quality of companies that are offering them, so they often make poor choices in purchasing homeowners insurance. The results can be catastrophic for them; homeowners insurance protects what is the largest asset many families have—their home. Limited coverage for a significant loss can have devastating financial and emotional consequences. The effects can spread throughout a community, particularly in the case of losses to many homeowners due to a catastrophe such as a wildfire. This article explores the information available in the homeowners insurance market and suggests potential improvements. It suggests that regulators improve information about coverage by publishing online the full text of policies and coverage summaries and that they improve information about quality by publishing claim statistics. In both cases, the Rutgers Center for Risk and Responsibility at Rutgers Law School has done the basic research, and the article includes templates to implement the coverage and claims quality summary. Even in the absence of regulatory action leading to the publication of the text of policies, a coverage summary, and claim statistics, and even if those proposals are adopted, there is room for independent, noncommercial intermediaries to intervene in the market to provide better information to consumers. Our Center also has taken a first step to similarly improving the market for homeowners insurance. RU InsureScore, discussed in Part IV, emulates Consumer Reports ratings in providing an evaluation of the coverage provided by eleven of the twenty largest homeowners insurers, using the familiar hundred-point, five-star scales.
Recommended Citation
Feinman, Jay M., "Improving the Market for Homeowners Insurance" (2024). Connecticut Insurance Law Journal. 422.
https://digitalcommons.lib.uconn.edu/cilj/422
Accessibility Requirements
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