Half of the UK’s drivers find motor insurance too confusing, and 86% believe it needs to be easier to understand, according to a survey commissioned by Co-op Insurance.
The survey of 2,000 UK drivers, conducted by Atomik Research, found that 51% of drivers do not understand how their premium is calculated. It also found that 43% are unclear about why their premium may fluctuate year to year, and 36% do not understand their policy price in relation to their vehicle.
In addition, the research found that many drivers are unaware of what their premium is for. For example, 42% of drivers do not realise that part of it is collected to pay costs if another driver claims for personal injury as a result of an accident that is their fault.
As a result of the confusion, Co-op insurance has launched the first in a series of three videos designed to explain how insurance pricing works.
The first video shows that a quarter of the premium goes towards the cost of the driver injuring others and a fifth goes towards repairing damage to other people’s property.
It explains that a fifth of the premium also goes towards a policyholder’s own car for costs such as theft and repairs. It also outlines how the premium pays for Co-op insurance’s business costs and insurance premium tax.
Co-op Insurance products and pricing director James Hillon said: “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.
“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.
“At Co-op Insurance we are committed to doing the right thing for our customers. This is the second step, following a home insurance initiative earlier this year, in our journey to improve transparency and make insurance easier to understand.”
What confuses UK drivers about insurance
|Confusion||% of drivers confused|
|How premium is calculated||51%|
|Why prices can change annually||43%|
|What isn’t covered||39%|
|The policy price in relation to vehicle value||36%|
|What different add ons are i.e. legal cover||36%|
|What is covered||28%|
|Why it isn’t easy to compare policies easily||23%|
|Insurance Premium Tax||23%|
|When I need to update my insurer on changes||18%|
Source: Co-op Insurance