Karen Hunter recently spoke with Consumer Reports investigative reporter Lisa Gill about how homeowners’ insurance really works and why many Americans are surprised when they try to file a claim.
During the conversation on The Karen Hunter Show, Gill explained that where you live plays a major role in how much you pay and how insurers assess risk.
“A massive amount is tied to your ZIP code,” Gill said, noting insurers focus heavily on climate-related risks such as hurricanes, floods, wildfires, tornadoes and hail. She said hail and wind are now the top reasons homeowners file claims.
Hunter described what she called an “adversarial relationship” with insurance companies, saying many people feel insurers are “always trying to find out how not to pay.” Gill agreed that the system is confusing, especially because standard homeowners’ policies do not cover floods or earthquakes. Flood insurance must be purchased separately through a federal program administered by FEMA, and coverage rules vary widely.
Gill stressed the importance of reviewing policies line by line each year.
“Ask two questions,” she said. “What am I not covered for here? Tell me explicitly. And if I paid just a little more, what else should I get?” She cited options like extended replacement coverage and inflation guard, which can add protection if rebuilding costs spike after a disaster.
Consumer Reports surveyed about 23,000 policyholders and found that 16% learned they lacked sufficient coverage only after filing a claim. “That is not the time you want to find out,” Gill said.
Gill also revealed lesser-known factors that affect premiums, including the Comprehensive Loss Underwriting Exchange, or CLUE, report, which lists prior insurance claims on a property. She added that insurers routinely factor credit scores into rate setting. “Every year when they renew, they are checking your score again,” she said.
Hunter and Gill also discussed how these practices disproportionately affect communities of color. Gill cited Urban Institute research showing lower credit scores, not crime rates, are more closely tied to higher insurance costs.
As a practical step, Gill encouraged consumers to work with local credit unions. “They can help you rebuild credit and navigate this system in a way that reflects your values,” she said.
