By ROB HULL
What am I covered for? Co-op’s survey found many people didn’t understand what their policy covered. Some 42 per cent of motorists didn’t know their insurance provides cover if another driver claims personal injury compensation following an accident that is their fault
The vast majority of motorists are baffled by motor insurance with 86 per cent saying it should be made easier to understand, according to new research.
The study by Co-op Insurance discovered that half of drivers don’t know how a policy is priced up, two fifths are unclear why their premium price may fluctuate year to year and over a third don’t understand how their choice of vehicle affects the amount they pay.
The insurer said it is campaigning to improve transparency about how premiums are calculated for customers, starting with a video that gives a break-by-break run-down of what drivers are paying for.
Some 51 per cent of the 2,000 motorists polled by the insurer said they do not understand what factors are taken into consideration for working out policy prices.
More than two-fifths (43 per cent) view motor insurance as a ‘grudge purchase’, with 15 per cent admitting they would not buy it if it was not a legal requirement.
These results aren’t at all surprising when you factor in that many drivers aren’t aware of what their insurance policies cover.
For instance, 42 per cent of motorists didn’t know their insurance provides cover if another driver claims personal injury compensation following an accident that is their fault.
In a bid to inform drivers – and possibly reduce the number of calls from disgruntled customers complaining about the price of their policy – the insurer has released a video that explains how just a fifth of what a policyholder pays is towards theft or damage of their own car.
It also openly claims well over a quarter of the total insurance fee paid goes towards the company costs and profits, with 26 per cent funding running the business and another two per cent pocketed.
James Hillon, products and pricing director at Co-op Insurance, said: ‘Motor insurance can be complex and the research has found that drivers are often confused by it.
‘The new video aims to answer the age old question drivers have about the cost of their premium in relation to the value of their vehicle.
‘At the Co-op we want to keep communities safe and we hope that by explaining insurance it will help drivers to understand the value they get and reduce the chances of them deciding to go without insurance.’