Understand Insurance Motor Research Report Prepared by Quantum Market Research for Understand Insurance
Background to this report To better understand consumer attitudes around their car insurance, Understand Insurance commissioned Quantum Market Research to conduct a national online survey of more than 1000 people. The research project focused on uncovering attitudes towards car insurance, with specific focus on potential exposure to financial loss. The results of the survey form a key part of Understand Insurance, the ICA s national consumer campaign aimed at empowering consumers to make better, more informed decisions by demystifying insurance. Page 2
Research methodology & sampling Total sample: n=1017 Car owners Before taking part in this survey, respondents were screened to ensure they were: Australian residents. Aged 18+. Owners of a car which was registered (independently or joint-ownership). Not on a learner s permit. The survey was conducted in May 2014. All respondents completed the survey online. Each respondent took 6-8 minutes to complete the survey. A nationally representative sample was obtained (based on gender, age and location). Respondents were sourced from an ISO accredited market research panel which is considered among the highest quality in the industry (Survey Village). This panel is carefully managed to ensure respondents are representative of the total population and are not overresearched. Page 3
A nationally representative sample Age: % of sample: Location: % of sample: Location: % of sample: 18-24 9% Sydney 18% Regional NSW 9% 25-29 15% 30-39 21% 40-49 20% 50-64 18% Melbourne 17% Regional Vic 6% Brisbane 9% Regional Qld 12% Perth 10% Regional WA 3% Adelaide 7% Regional SA 3% Hobart 1% Regional Tas 2% 65+ 18% ACT (Canberra) 2% NT 1% Gender: % of sample: Male 49% Female 51% Page 4
Sections of this report Summary of key findings Understanding of insurance Potential exposure to financial loss Additional data Page 5
Summary of key findings Page 6
Top 10 findings from this research 1. Almost one in five car owners (17%) use general knowledge, without consulting another source, to understand what their policy covers. 2. 3. More than one in five car owners (21%) risk not having the insurance they need because they don t look at their policy document at all. And more than half (59%) acknowledge that they don t understand all the details in their policy document. Younger drivers (those aged 18-29) are especially vulnerable to significant financial loss because, compared to the average car owner, they re much less likely to read and understand their policy document (34% don t look at their policy document at all, compared with 21% of all Australians). 4. Around one in six (15%) not covered state they prefer to take risks than insure their car against a total loss scenario. 5. Around one in five of those with third-party only insurance wrongly believe that they are covered against damage caused by an uninsured driver (21%) or accidents which are their fault (20%). Page 7
Top 10 findings from this research 6. Less than two-thirds of car owners (60%) compared their policy with other insurers policies before renewing this year. However, those who did are significantly more likely to perceive they are clear on what is and isn t covered by their policy. 7. More than one in ten (12%) of car owners say they ve knowingly misrepresented details to their insurer. 8. Most (61%) car owners leave valuables in their car. Of these, only a third (35%) know whether their policy covers them against theft. 9. Higher-income individuals (household income >$150k) are leaving themselves exposed to financial loss. The majority (74%) leave valuables in their car, yet less than half (48%) know whether their policy covers them against theft. 10. Independent websites about insurance (including Understand Insurance) form an important source of information available; a quarter (25%) consult these sites for information about their insurance and cover. Page 8
Understanding of insurance Page 9
Almost one in five car owners (17%) use general knowledge, without consulting another source, to understand what their policy covers Sources of information used to understand policy coverage: Q17 Base: All (n=1017) Read policy document 37% Only a third (37%) consult their policy document as a source of information about what their policy covers. Insurer's website 32% Insurer by phone 27% Other websites about insurance Insurance comparison websites 15% 25% Other websites about insurance (including Understand Insurance) form an important source of information available; a quarter (25%) consult these sites for information about their insurance and cover. Spoke to relative / friend None of the above, I just use my general knowledge 11% 17% 0% 50% Almost one in five (17%) who select None of the above, I just use my general knowledge about insurance are at risk of unknowingly exposing themselves to significant financial loss. They are significantly more likely to come from low-income households (20% of those from households with <$50k p/a). Note: Mentions <5% shown in slide notes. Page 10
More than one in five car owners (21%) risk significant financial loss because they don t look at their policy document at all Reading policy document: Q18 Base: All (n=1017) 21% Agree I don t look at my policy document at all Those who don t look at their policy document are more likely to: Be younger drivers (34% of those aged 18-29). Have third-party only insurance (41%). Leave valuables in the car (24%). 45% Agree I only check my contact and vehicle details are correct Those who only check contact and vehicle details are correct are also more likely to: Be younger drivers (55% of those aged 18-29). Have third-party only insurance (60%). Note: These agreements are from separate questions, i.e. they aren t part of the same scale so can t be added together. Page 11
Potential exposure to financial loss Page 12
Those with third-party cover are more likely to be exposed to potential financial loss Q21 Base: Those with third-party only or thirdparty fire & theft cover who say they are definitely not covered against one or more incidents (n=99) In an accident which was later deemed to be my fault, due to my financial setback I would... 20% Be much worse off and really suffer 40% Be worse off and suffer quite a bit 29% Be worse off but not really suffer 11% Resume at least the same standard of living I have now 89% of car drivers with third-party insurance cover are exposed to significant financial loss. *n.b. Respondents were asked to exclude any personal injury to ensure their consideration was purely financial in nature. Page 13
More than 90 per cent of car owners with comprehensive insurance don t know what value their car is covered for If your car was written off, which best describes your level of cover: Q15 Base: Those with comprehensive insurance (n=850) 21% Cover based on an agreed value approximately the same as market value 20% Cover based on an agreed value higher than market value 9% I don t know how much I m covered for 49% Cover based on the market value Those whose cover was based on an agreed value are more likely to: Drive a car with a value of >$20k. Perceive they have a clear understanding of their policy document. Those who didn t know how much they re covered for are more likely to: Be younger drivers (16% of those aged 18-29). Be female (14% females vs. 5% of males don t know how much they re covered for). Page 14
Knowledge of coverage Third-party only Perceived coverage for incidents: Q19 Base: Those with third-party only cover (n=82) Definitely covered Unsure Definitely not covered Damage to someone else's property Damage to own car if not at fault & other vehicle insured 62% 46% 40% 34% 13% 4% Despite being covered, a high proportion of those with third-party only insurance are either unsure or perceive they definitely aren t covered for these incidents. Damage to own car if not at fault & other vehicle uninsured Damage to own car if at fault 21% 20% 32% 55% 49% 24% Around one in five of those with thirdparty only insurance wrongly believe that they are covered against damage caused by an uninsured driver (21%) or accidents which are their fault (20%). Damage or loss by theft 12% 38% 50% Damage or loss by fire 10% 43% 48% Damage or loss by vandalism 9% 44% 48% 0% 100% Page 15
Knowledge of coverage Third-party fire and theft Perceived coverage for incidents: Q19 Base: Those with third-party fire and theft cover (n=62) Definitely covered Unsure Definitely not covered Damage to someone else's property 68% 23% 10% Damage to own car if not at fault & other vehicle insured 42% 39% 19% Damage to own car if not at fault & other vehicle uninsured 29% 48% 23% Damage to own car if at fault 23% 19% 58% Damage or loss by theft Damage or loss by fire 81% 82% 16% 18% Despite being covered, around four in five of those with third-party fire and theft insurance are uncertain about their coverage against fire / theft. Damage or loss by vandalism 24% 56% 19% 0% 100% Page 16
Knowledge of coverage Comprehensive Perceived coverage for incidents: Q19 Base: Those with comprehensive cover (n=850) Damage to someone else's property Damage to own car if not at fault & other vehicle insured Damage to own car if not at fault & other vehicle uninsured Damage to own car if at fault Damage or loss by theft Definitely covered Unsure Definitely not covered 81% 87% 17% 11% 80% 86% 87% 19% 12% 12% Analysis shows that car owners with comprehensive insurance have significantly more certainty of what their insurance covers. Results may imply that some of those with comprehensive coverage falsely perceive they are covered for everything. Collisions with uninsured drivers and vandalism are not always covered so we would expect to see a higher percentage who say they re definitely not covered for these incidents. Damage or loss by fire 81% 18% Damage or loss by vandalism 72% 27% 0% 100% Page 17
Less than two thirds of car owners (60%) compared their policy before renewing this year Comparing insurers: Q16 Base: All (n=1017) 3% First time purchasing insurance 3% Policy arranged by someone else 22% Compared insurers, then took out a policy with a different insurer 38% Compared insurers, then renewed policy with the same insurer 34% Did not compare insurers, then renewed policy with same insurer Those who compared and switched are more likely to: Be younger drivers (26% of those aged 18-49). Although car value has no influence, they are more likely to come from highincome households. Those who compared but did not switch are more likely to: Have cars with high value (46% of those with cars worth $20k 40k) or very high value (65% of those with cars worth >$40k). Have comprehensive level of cover (40%). Those who renewed without comparing are more likely to: Be older drivers (44% of those aged 50+). Page 18
Those who don t compare before renewing are more likely to be unsure what their policy covers % who are unsure whether incident is covered by their policy: Q16 & Q19 Damage or loss by vandalism Damage to own car if not at fault & other vehicle uninsured 27% 21% 26% 33% Damage or loss by fire Damage to someone else's property Damage to own car if at fault Damage to own car if not at fault & other vehicle is insured Damage or loss by theft 18% 20% 16% 23% 14% 15% 13% 17% 13% 13% 0% 50% Compared insurers this year (n=609) Did not compare insurers this year (n=349) Page 19
Around one in six (15%) not covered state they prefer to take risks than insure their car against a total loss scenario Why not insure against damage / loss of your car: Q20b 20f Base: Those who say they are definitely not covered against one or more incidents (excluding damage to third-party property) (n=259) It's too expensive 54% Of those who say car value is low so not worth it : 45% could be considered at financial risk*. Own a car with average value of $3,558**. Car value is low so not worth it 48% Prefer to 'take the risk' Perceive risk of needing to claim Insurers don't pay out enough Perceive financially secure Just didn't think about it Uncertain whether needed Other 15% 12% 8% 7% 6% 4% 6% Those who say they prefer to take risks : Are more likely to be male (19% males vs. 11% female). Although less likely to be 65+, these car owners are spread across all age groups. 0% 100% *Less than two months pay in savings, or credit card debts equal to more than two month pay, or have difficulty paying household bills. ** Calculated by taking a mid-point from every response selected, e.g. $1,000 $3,000 = assumed value of $2000. Page 20
More than one in ten (12%) of car owners say they ve knowingly misrepresented details to their insurer Details misrepresented in the past five years: Q22a Q22b Base: All (n=1017) There are 13,000,000 registered passenger vehicles in Australia Source: 2013 Motor Vehicle Census available free from www.abs.gov.au Misrepresentation % of sample: Equivalent number of vehicles: Where vehicle is kept overnight 6% 780,000 Value of vehicle 6% 780,000 Average distance driven 4% 520,000 Speeding infringements 3% 390,000 Having alarm / immobiliser 3% 390,000 Vehicle modifications 3% 390,000 Age of youngest driver 2% 260,000 Non-speeding infringement 2% 260,000 Loss of licence 2% 260,000 Previous accidents 1% 130,000 Drink driving convictions 1% 130,000 Overall, 12% of car owners misrepresented one or more of these details, they tended to be: Younger drivers (23% of those aged 18-29). Urban dwellers (16% of those living metro, vs. 4% regional). High value car owners (25% of those with a car worth $40k+). Page 21
The majority (61%) of car owners leave valuables in their car. Of these, only a third (35%) know whether their policy covers them against theft Valuables left in car: Q23 Base: All (n=1017) Whether insured for theft of valuables: Q26 Base: Those who do leave valuables in their car (n=625) 39% Never leave valuables in their car 61% Leave valuables in their car (12% very often, 49% occasionally) 35% Know they have coverage (22% on home contents, 13% as part of car policy) 54% Are unsure whether they have coverage Those who leave valuables in their car are more likely to: 13% Know they don t have coverage Have high household income (74% with household income >$150k). Drive a car of very high value (77% of those whose car is worth $>40k). In the majority of cases (42%) this is sports equipment (which those with lower value cars are significantly less likely to leave). See Slide 30 for detailed breakdown. Page 22
Additional data Page 23
Ownership of car Car ownership: Q4 Base: All (n=1017) Car finance: Q12 Base: All (n=1017) 13% Joint ownership 12% Making finance repayments 87% Own a car independently 88% Car is paid for in full Page 24
Type and current value of car Type of car: Approximate current value of car: Q5 Base: All (n=1017) Q13 Base: All (n=1017) Sedan 44% Very low (<$5k) 22% Hatch 25% Low ($5-10k) 23% SUV 16% Medium ($10-20k) 31% Wagon 7% UTE 4% High ($20-40k) 18% People mover 1% Very high (>$40k) 4% Cab chasis 1% Don't know 2% 0% 50% 0% 50% Page 25
Age of car Approximate age of car: Q10 Base: All (n=1017) Less than 3 years 3-5 years 20% 19% On average, older people (those aged 50+) are more likely to own a car which is more than ten years old. Those aged 25-29 are significantly less likely to own a car over ten years old (only 17% of them). 5-10 years 32% More than 10 years 29% 0% 100% Page 26
Frequency of car use How frequently do you use your car: Q10 Base: All (n=1017) Every day (or nearly every day) 65% Note: There was no significant correlation between the frequency with which car owners used of their car and their perceptions of their reliance on their car. 3-5 days per week 25% 1-2 days per week 9% Less often 1% 0% 100% Page 27
Uses of car Which do you use your car for: Q9 Base: All (n=1017) Shopping trips / domestic errands Recreational / social activities 79% 90% Note: There was no significant correlation between car owners use of their car and their perceptions of their reliance on their car. Holidays / weekends away 66% Commuting to / from work 53% Driving 'just for fun' 42% School run Business purposes 21% 17% None of the above 1% 0% 100% Page 28
Reliance on car Which of the following best describes how much you rely on your car?: Q11 Base: All (n=1017) 76% I am absolutely reliant on my car, without it I would struggle considerably 22% I am only somewhat reliant, I could probably live without it 1% I don t really need my car Page 29
Valuables left in car What items do you leave in car: Q24 Base: Those who say they do leave valuables in car (n=625) Misrepresentation % of sample (total): % of those with household income >$150k (n=61) Food shopping 47% 49% Retail shopping 44% 52%* Clothing 42% 54%* Mobile phone 32% 41% Electronic goods 28% 33% Handbag / purse / wallet 26% 30% Tools 24% 18% Sports equipment 23% 38%* Cash 15% 11% Credit / debit card 9% 13% Jewellery 4% 10%* GPS 3% 2% * = significantly more than rest of population Page 30
Prevalence of dash-cams Have dash-cam fitted: Q27 Base: All (n=1017) Planning to install a dash-cam : Q28 Base: Those who do not currently have a dash-cam fitted (n=822) 7% Have a dash-cam fitted Of those car owners who do not currently have a dash-cam fitted, more than one in eight (13%) say they intend to fit one in the next twelve months. 93% Do not have a dash-cam fitted Page 31