Released: November 03, 2008
Consumer Action insurance poll highlights downsides to filing a claim
Widespread misunderstanding of rental car insurance also found
More than two-thirds of respondents had their homeowner’s insurance premiums increased after they filed a claim, according to an online insurance poll released today. One in five respondents said that the insurance company did not renew the policy after a claim was filed. “This is one of the most unfair aspects of the insurance industry,” said Linda Sherry of Consumer Action. “You pay for protection—sometimes for years—and once you need it, they drop you like a hot potato.” Sherry noted that often it is a real scramble for people to replace coverage, and in most cases, may end up paying much more for new (and sometimes less) coverage because of their claims history. The poll of 800-plus people, conducted by Consumer Action from Sept. 17 through Oct. 9., was designed to learn about what types of coverage is carried by households and to gauge consumer knowledge on the particulars of various types of insurance. Overall, the survey found that consumers appear to recognize the benefits of being insured and the value of paying premiums to ensure this protection. The poll also displayed that surveyed consumers have a good knowledge of the ins-and-outs of insurance. However, widespread confusion exists about what is covered by credit card rental car insurance. The survey was taken by 828 people. Of those, 96.5% (799) have auto policies, 75.1% (622) have homeowner’s insurance, 64.9% (537) have life insurance and 9.2% (76) have renter’s coverage.Auto insurance
The U.S. is a nation of drivers, so it was no surprise that 799 out of the 828 respondents had auto insurance. Of the 576 people who had filed an auto insurance claim, a whopping 92% said that their premium had been increased following the claim. More than 10% said that their policy was not renewed following a claim. Most people (41%) insured two cars in their households, while 31% insured one. The majority paid between $1,001 and $1,500 per year for auto coverage, while 26% paid less than $1,000.Consumer knowledge
Respondents were very well informed about most insurance issues in the survey, however credit card rental car insurance emerged as a widely misunderstood topic. Many credit cards provide “collision damage waiver” or CDW coverage when the card is used to rent a car. Consumer Action’s survey highlights that many people incorrectly believe that the rental car insurance offered by credit cards protects them from liability for their actions while driving a rental car. The survey offered five multiple-choice answers to the question “Credit card rental car insurance covers which of the following occurrences?” Four of the six answers were incorrect (see below). Respondents were allowed to choose multiple answers. At least one correct answer was chosen by half of the respondents. Many respondents chose these incorrect answers:- Property damage caused by you while driving the car (30%)
- Medical coverage for a bicyclist you hit while driving the rental car (12%)
- None of these (14%)
- All of these (49%)