If you find motor insurance too complex to understand, you are not alone. About half of motorists (48%) find motor insurance confusing, according to a recent Co-op study.
UK drivers said they were mostly confused about how premium is calculated (51%), why prices change annually (43%), what isn’t covered (39%), and what is covered (28%)! That sure makes for a lot of confusion.
In total, 2,000 UK drivers were interviewed last May, and the results show that motor insurance is a grudge purchase for over two fifths (43%) of the UK’s drivers.
So much so that 15% confess they wouldn’t buy motor insurance if it wasn’t illegal to drive without a cover.
As a result, the Co-op Insurance is launching a series of three animated videos, for drivers to understand in simple terms how insurance pricing works, and get more familiar with motor insurance.
The Co-op insurance seeks to improve transparency for its users, and this is the second part of an ongoing effort to make insurance easier to understand.
Earlier this year, the Co-op Insurance launched an online tool made to simplify home insurance, which we covered here on The Savvy Scot as well.
This online tool was sent to 10,000 home insurance customers, who received it positively. It explained how home insurance premiums are calculated and answered other questions that were confusing to home insurance customers.
The video is meant to answer why premium prices are set the way they are, in relation to a vehicle’s worth. It explains which part of your premium goes towards paying for third party injuries in case of an accident, with a quarter of premiums going towards this.
It also shows that around 20% of a policy goes towards repairing damages done to other people’s property. Another fifth goes into getting your own car fixed in case of damage. It also shows taxes and business costs.
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.
“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.”