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In the last several years, there have been many cases of consumers being impacted by an incident that led to a home insurance claim, only to find that this issue wasn't covered by their plans. When that happens, consumers can get understandably frustrated, but part of that arises from the fact that many Americans simply don't have a strong understanding of their coverage. Now, a law in New Jersey could help residents with this issue, and insurance agents elsewhere may be wise to follow suit.

Beginning in June, New Jersey residents who are both buying and renewing home insurance will be required by law to be provided with a one-page disclosure form from their insurers, according to a report from the state's Department of Banking and Insurance. These forms will have to clearly explain to consumers what is and is not covered, and was first passed back in 2013.

""As we worked with New Jersey consumers following [Hurricane Sandy], we saw that some homeowners didn't fully understand their homeowners insurance policy,"" said Commissioner Ken Kobylowski. ""For example, some consumers believed that homeowners policy covers flood damage. It does not. Flood insurance must be purchased separately. This one-page summary is one way the state is working to raise awareness of insurance issues so consumers understand clearly what their policies do and do not cover.""

How does it work?
The document in question is standardized, and was developed by the state regulator in association with various insurers operating within its borders, the report said. It will have to summarize common types of coverage, talk about policy features, and spell out whatever exclusions may be applicable, among other things. And if consumers' home insurance policies don't fit any of the five pre-determined templates, individual insurers can work with the state to develop more applicable disclosures, but will still be required to provide that information to their policyholders going forward.

When consumers get frustrated with their coverage, it's often because they don't understand it or know what they're paying for. If agents can help to clear up any issues that arise with strong communications and a helping hand, they're likely to significantly boost their customer satisfaction rates. Likewise, that kind of effort can also end up boosting client retention rates as people and agents build stronger relationships based on a clearer understanding.

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