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Advice & More May 2013

Dollar Sense

Clueless About Car Insurance: You’ll be Surprised What You Don’t Know

By Teresa Ambord

The average score on the 10 question quiz was only 32 percent. Yet auto insurance is something we pay a bundle for each month. More importantly, a person with such limited knowledge who gets into an accident will likely have no idea what his or her policy covers.

How much do you know about the car insurance you pay for every month? Or automobile insurance in general? Think you have a pretty good handle on it? Here’s a brief pop quiz.

  1. What does uninsured motorist coverage pay for?
  2. What about comprehensive coverage? When does it pay off?
  3. If a friend borrows your car and crashes it, whose insurance pays for the damage?

The answers:

  1. Only two percent of people taking the survey knew that comprehensive coverage pays for damage to your car if an object falls on it (like a tree), or if your car hits an animal (like a deer), damage to your car from a flood, and for theft of your car.
  2. Fourteen percent correctly answered that uninsured motorist coverage pays for bodily injury to you and your passengers if your car is hit by someone without insurance, or if your car is hit by a hit-and-run driver.
  3. There’s a good chance you got this one, as 72 percent knew this answer. Your own insurance would pay if a friend borrows your car and crashes it.

 

The Quiz

These questions are part of a multiple-choice quiz, sponsored by Insurance.com. It was taken by 500 drivers age 18 and up. The average score on the 10 question quiz was only 32 percent. That means most drivers only got one out of three questions right. Yet auto insurance is something we pay a bundle for each month. More importantly, a person with such limited knowledge who gets into an accident will likely have no idea what his or her policy covers. For years, I carried comprehensive insurance because I thought it was just like it sounded. That is, its name implies that it covers anything and everything. The name is misleading. Finally, an insurance agent explained to me that I was not covered if I crashed my car, because I did not have collision insurance on my policy.

 

Who Has the Best Knowledge of Car Insurance?

Based on the results of the survey, women outscored men, with 35 percent of questions answered correctly, compared to 27 percent for men.

As for region, the south scored the highest at 34 percent. Here’s the breakdown.

South: 34%

West: 32%

Midwest: 31 %

Northeast: 29%

What about age? This one might be surprising. Drivers age 40 and over scored 39 percent. That’s the highest average score of any grouping by gender, geography, or age. Drivers 18 to 29 answered 24 percent correctly on average.

Does this mean you should sit down and read your policy beginning to end? No. Oddly enough, when people surveyed were asked if they’d read their policies, the ones who had read the entire policy scored lowest, at 28 percent. Those who had read part of the policy scored just a bit higher at 29 percent. And those who said they had never even tried to read their policies scored the best, with 35 percent. Why? Michelle Megna, managing editor of Insurance.com says it could be that policyholders see the terms as “gobbledygook. Their eyes are moving over the words but there’s no understanding.”

If you are quick to say you probably do understand your policy, watch out. Cockiness will get you nowhere. Those who said they had “excellent” knowledge of their car insurance scored the lowest, at 26 percent, compared to those who said they were “terrible” at this knowledge scored 28 percent. The best scores were by those who said they were “good or okay,” and they scored 34 percent.

Take the 10 question quiz yourself by logging onto:

http://www.insurance.com/auto-insurance/car-insurance-test.html

 

Safety Features Make Driving a Better Experience

In spite of what our youngers like to say, research by AAA shows that older drivers have better habits. They are more likely to wear seat belts, less likely to drink and drive, and less likely to speed. Thus all the slow driver jokes aimed at gray heads. Jokes aside, “in reality, what we know is that older drivers are actually among the safest drivers on the road,” said Sharon Berlin, a AAA research analyst. She explains that driving is a function of ability, not age, and carmakers are trying to design cars to make them easier and more comfortable to drive for everyone. That’s not to say that older drivers won’t appreciate the effort.

One new feature is the push button ignition. “If you have any arthritic joints in your hands, the fine motor skills needed to grasp the key and turn it can really elicit a lot of pain. So the push-button ignition simplifies that,” said Berlin.

A few other points of interest to anyone with limited or curtailed abilities:

  • Ford Focus has park-assist that essentially parks the car itself.
  • Mercedes-Benz has a warning signal that sounds when a driver drifts out of the current lane. This is helpful for people who have a limited ability to turn their heads or who have limited peripheral vision.
  • Wider doors make easier maneuvering for those who have difficulty getting in and out of cars. All of these features are created with older adults in mind, but the fact is, they make driving more comfortable for drivers of any age. After all, not even those of us with a little snow on the roof want to think we’re driving cars made for old folks. And no car maker wants to produce a car that is pigeonholed as being for a limited market. It just makes sense that new cars incorporate these features that just happen to make life easier for older drivers too.

 

Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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