Many people do not have a home fire insurance policy, and the main reason for this is a lack of understanding of its importance. In a previous article, we discussed why various forms of personal insurance are not widely adopted. Despite the growth of the insurance industry, home fire insurance is still commonly overlooked.
In the past, fire insurance was the largest generator of premiums and profits for the industry. This was mainly due to high fees and low loss experiences. Industrial customers were required to purchase fire insurance for term loans or working capital limits, while individuals rarely purchased it for their homes.
However, the picture changed when the fee was eliminated in the late 2000s. Fire insurance premium rates decreased significantly and companies became more cautious about fire risks. While the portfolio grew organically, adoption of individual fire insurance remained low.
The demand for home fire insurance is not widespread, so companies do not promote it intensively. Unlike healthcare costs, which can be a major pain point for people, the cost of a fire policy is relatively minimal.
It is crucial to consider purchasing a home fire insurance policy because it covers more than just fires. It protects against floods, earthquakes, riots and other risks, providing coverage not only for your home but also its contents. The cost of the policy is minimal compared to the potential loss you may suffer.
In the next article, we will explore consumer behavior in health insurance. But for now, it’s critical to recognize the value of home fire insurance and consider adding it to your insurance coverage.
(Definition: Home fire insurance – a policy that provides coverage for fire-related damage to residential property and its contents.)
Sources: CoverNote, Business journalist specializing in insurance and corporate history.
2023-10-08 13:27:19
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