Insurance coverage

Most Drivers Don’t Understand Their Car Insurance Coverage – Forbes Advisor

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Auto insurance is an essential way to protect your finances if you cause an accident or your vehicle is damaged. But a new Forbes Advisor survey has found that most drivers don’t understand the insurance they pay for. Many drivers even think they bought coverage that they don’t actually have.

Here is an overview of the current state of car insurance knowledge among US drivers.

Drivers Think They Have Insurance They Don’t Really Have

Many drivers think they have auto insurance that isn’t actually available. For example, 50% of respondents thought their auto insurance policies included accidental death and dismemberment (ADD) coverage. But AD&D insurance is not part of car insurance policies.

At least 40% of drivers believe they have coverage that does not exist in an auto insurance policy:

  • 47% of drivers believe that “additional living expenses” coverage is part of their car insurance policy. This coverage is actually part of the homeowners and renters insurance.
  • 49% of drivers think their auto insurance includes “extended collision protection,” which isn’t really a type of coverage.
  • 41% say they have “vehicle emissions” insurance in their car insurance policy. There is no coverage for vehicle emissions.

Young drivers aged 18-25 are more likely to believe they have coverage that doesn’t exist:

  • 74% think they have AD&D insurance in their car insurance policy.
  • 69% say their auto insurance covers “additional living expenses.”
  • 68% believe they have “extended crash protection”, which does not exist.
  • 65% think their car insurance covers “vehicle emissions”.

Mistakes like these mean drivers can be surprised at what’s not covered by their insurance when trying to make a claim after a car accident or other vehicle damage.

Most don’t know what types of auto insurance cover common situations

We asked drivers to identify the types of auto insurance that would cover common issues. Overall, most respondents were unable to identify the correct coverage.

Most drivers don’t understand auto liability insurance, which is the foundation of auto insurance and required in most states. Only 31% of drivers knew that liability insurance would pay for fence repairs if they hit a neighbor’s fence. Here, 60% chose a wrong answer and 9% said they didn’t know.

A majority (59%) of drivers were unaware that comprehensive coverage would pay for damage caused by a tree branch falling on their car.

Car insurance can help with many of our stupid driving mistakes, but only 33% of drivers knew that collision insurance would pay for vehicle damage if they accidentally backed into a pole. For this question, 57% of drivers chose the wrong answer and 10% answered that they did not know.

The biggest knowledge gap concerned coverage for uninsured motorists. Only 3% of drivers knew that none of the standard types of insurance listed would cover injuries to an uninsured motorist if they hit your vehicle. (Uninsured motorist insurance covers your own injuries caused by an uninsured driver.)

Summary: Most Drivers Lack Basic Car Insurance Knowledge

Car insurance is meant to be a financial safety net if you cause an accident, injure yourself, or accidentally damage your own vehicle. But our investigation revealed that this safety net has a lot of big holes due to the lack of basic car insurance knowledge.

Drivers between the ages of 18 and 25 were the most likely to give incorrect answers and, in general, correct answers increased as the age groups got older, but then decreased at 77 and older.

For example, most young drivers (91%) believe car insurance will pay if their car won’t start. Only 3% of young drivers correctly chose “none of the above” from the choices given. But 62% of drivers aged 58 to 76 knew that none of the types of coverage listed would cover a vehicle that won’t start.

With auto insurance rates rising across the country, it’s becoming increasingly important to understand what coverage you’ve paid for (or haven’t purchased). Unfortunately, most drivers hit the road without understanding the financial consequences of an accident.

Survey methodology

This online survey of 2,000 US adults was commissioned by Forbes Advisor and conducted by market research firm OnePoll in accordance with the Market Research Society’s Code of Conduct. Data was collected March 23-24, 2022. Margin of error is +/- 2.2 points with 95% confidence. This survey was overseen by the OnePoll research team, a member of the MRS and a member of the American Association for Public Opinion Research (AAPOR). For full survey methodology, including geographic and demographic sample sizes, contact pr@forbesadvisor.com.