Car Insurance- Where does your money go?
- 48% of motorists find motor insurance confusing
- Over half (51%) don’t understand how motor insurance is calculated
- Motor insurance is a grudge purchase for over two fifths (43%) of the UK’s drivers
Half of the UK’s drivers believe that motor insurance is too confusing, with the overwhelming majority (86%)* believing that it needs to be easier to understand.
Research from the Co-op Insurance has found that over half (51%) don’t understand how their premium is calculated, two fifths are unclear why their premium price may fluctuate year to year and over a third (36%) don’t understand their policy price, in relation to their vehicle.
Research has also revealed that many people aren’t aware of some of the fundamental things that their premium is for. For example, 42% of drivers don’t realise it is in case another driver claims for personal injury, as a result of an accident that is their fault.
For two fifths of drivers, motor insurance is a grudge purchase, with over a tenth (15%) of drivers saying that they would not buy motor insurance if it wasn’t a legal requirement.
In response to this, the Co-op Insurance has designed a video to explain how insurance pricing works, to improve transparency for its customers.
The video aims to answer why premium prices cost what they do, in relation to the value of a vehicle. It explains what percentage of a motor insurance premium goes towards costs if a driver injured others, with a quarter** going towards this. It also explains how about a fifth of the policy premium price goes towards repairing damage to other people’s property. A fifth also goes towards a policyholders own car for things such as, theft of the vehicle or repairs to fix damage to a policyholder’s own car in case of damage. It also outlines business costs and Insurance Premium Tax.
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, which is the first in a series, aims to answer the age old question drivers have about the cost of their premium, in relation to the value of their vehicle. 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. Uninsured drivers have an impact on the cost of insurance generally, and can also lead to really unfair situations on honest road users if they are involved in an incident."
What confuses UK drivers about insurance
|Confusion||% of drivers confused|
|1. How premium is calculated||51%|
|2. Why prices can change annually||43%|
|3. What isn’t covered||39%|
|4. The policy price in relation to vehicle value||36%|
|5. What different add ons are i.e. legal cover||36%|
|6. What is covered||28%|
|7. Why it isn’t easy to compare policies easily||23%|
|8. Insurance Premium Tax||23%|
|9. When I need to update my insurer on changes||18%|