The sixth annual J.D. Powers Homeowners Insurance Study showed some serious misconceptions and neglect of potential catastrophe among American homeowners about their insurance policies. Over a twenty five percent, or one quarter of all homeowners believe they are uninsured.

Every insurance professional and consumer advocate will suggest that you evaluate two principal factors annually regarding your home insurance. The suggestion is that you make a detailed survey of your possessions and re-estimate their value. The other estimate that should be reviewed periodically is the actual cost of replacing the home, should it be destroyed.

According to Powers, homeowners who reevaluate their coverage limits on a regular basis to address issues such as increasing building materials and labor costs are significantly more satisfied with their insurer. These are individuals who work with their agents to rework the replacement costs on the home.

Twenty-six percent of homeowners think they have a guaranteed replacement cost policy, while 25 percent do not know what kind of policy they have. That is a remarkable amount of uncertainty on what could be a life-wrecking financial loss. Unfortunately, homeowners’ insurance is just another document to sign when the home sale closes, and too many people pay too little attention.

Approximately 50 percent of homeowners incorrectly believe the insurance company or their agent – and not themselves – bear the responsibility for determining the replacement cost of their home and its contents. In last year’s survey, that figure was almost 60 percent. While the numbers show improvement, the homeowner ignorance quotient they reflect is remarkable. Also worthy of comment are the number of insurance agents who represent these people and who have failed to inform them of their responsibility regarding their own financial security.