Survey: Americans in the Dark about Car Insurance

Drivers think they know the basics when it comes to coverage and rates, but most wouldn’t getting a passing grade in Car Insurance 101

insurance awareness

“What you don’t know can’t hurt you…”

… is an entirely false statement in the world of auto insurance.

Car insurance is essential, and not having the right coverage can put you in a potentially financially devastating situation. But insurance is also complicated. There are different types of coverage, different state legal requirements, and different insurance companies, each with its own unique method of assessing risk and determining rates.

The Zebra conducted this survey* to gain a better understanding of drivers’ insurance awareness and their assumptions about what factors affect their car insurance rates, and to help provide the education they need to make more informed insurance decisions.

What did we find? Consumers are confident about their insurance awareness, but most shouldn’t be. Still, the majority of drivers want to understand what impacts their insurance risk better and to take action to lower their rates.

car insurance awareness quiz

Consumers are overconfident yet uninformed about car insurance:

  • 81% say they have coverage they need, but 99% failed to correctly identify 10 basic coverage types and terms.
  • 90% say they are moderately or very well informed about what affects their car insurance rates but only 21% scored a passing grade (a “D” or higher) when asked to identify specific factors which do impact rates.
  • The notion that “I’m a good driver, so I shouldn’t need car insurance” still stands: 94% of people think they are good drivers…but 28% filed a claim in the past year alone.

What consumers DON’T know about car insurance:

1. They don’t know what coverage they need or why.

  • 22% don’t know they are required to have car insurance by law.
  • Only 33% say they need car insurance because they are required to have it by a financing company, yet 64% of people are leasing or financing their vehicles.
  • Only 58% say they need car insurance to repair or replace their car if it is damaged by flood, fire, or other weather events, which is particularly concerning in light of the recent hurricanes which left hundreds of thousands of uninsured and underinsured people in Texas and Florida unable to file claims.

2. They don’t know basic coverage types or terms.

For example:

  • Just 35% correctly stated that liability coverage covers damage to your vehicle in the event of an accident caused by another insured driver. This is the type of coverage legally mandated for drivers everywhere in the U.S. except New Hampshire.
  • 42% correctly stated that collision coverage covers damage to your vehicle if you hit a stationary object like a tree or a building.
  • 46% correctly stated that a premium is the term for what you pay to your insurance company for your coverage (typically on a monthly or semi-annual basis).

3. They don’t know what impacts their rates.

Rating factors which the majority got right include:

  • Your age
  • How many miles you drive annually
  • Car make, model, and age
  • Getting a speeding violation or DUI
  • Causing a car accident
  • How many people are insured on a single policy

Rating factors which the majority missed include:

  • Where you live
  • Your credit score
  • Whether you own your home (vs. rent)
  • Your marital status, gender, and highest level of education
  • Whether you drive for personal use or business (including for Uber or Lyft)
  • Filing a claim
  • Your history of insurance and continuous coverage
  • How you pay for your insurance premium

Plus, we know plenty of folks think certain things impact their car insurance that have no impact whatsoever.

These false factors do not impact your rates – but how many people think they do?

  • The color of your car (23% think this impacts their rates)
  • Your income (23%)
  • Your race (8%) or religion (3%)
  • Whether you have young children (18%) or even pets (4%)
  • Your abilities/disabilities (ie. vision, mobility) (35%)
  • Getting a parking ticket (25%) or failing to pay a toll (14%)
  • Knowing your insurance agent personally (7%)

4. They don’t know their options.

  • 61% think their car insurance is too expensive and 34% say they have limited car insurance options.
  • 46% shop around for quotes from multiple car insurance companies at least every year, 23% only do so when their rates increase, and 31% don’t shop around.
  • 37% think they can only switch car insurance companies at the end of their policy term, which is false.

5. They don’t know that they can impact their car insurance rates (or how).

  • 81% want to lower their car insurance rates, but 45% say they don’t know what to do to lower their rates, and 36% think there is nothing they can do to lower them.

How do we fix this?

When it comes to car insurance, it seems people don’t know what they don’t know. Many feel confident about their car insurance knowledge and even of their own coverage choices, but it’s clear most lack the critical awareness necessary to ensure they are protected against unpredictable accidents or crises.

Fortunately, people want to know how they can take action to lower their rates and what those factors are that impact their risk.

At The Zebra, we want to give consumers the tools they need to make informed decisions about their auto insurance coverage. In addition to our powerful quote comparison engine, which allows consumers to compare real quotes from hundreds of auto insurance companies at once, we’ve also created the Insurability Score™, a brand new (and always free) tool which helps people understand what factors impact their individual insurance risk, by how much, and what they can do about it. Get your Insurability Score.

About the Survey:

*The Zebra’s Auto Insurance Awareness Survey presents the findings of an online survey of 1,165 U.S. auto insurance consumers ages 18 and older. The survey was conducted by independent research firm Survata from October 4-5, 2017. The margin of error for a sample of this size is +/-3% at a 95% level of confidence.

See full results: The Zebra Auto Insurance Awareness Survey

The Zebra Insurance Awareness Infographic