Study: A third of Canadians do not carefully read their insurance policies

A new study published by Sonnet Insurance has found that one in three Canadians have not read their home and/or auto insurance policy.

The study, which looks into the insurance literacy of Canadians, also found that among those who attempt to read their policies, many report that they have difficulty grasping some of the more esoteric jargon within it, or are intimidated by the lengthy descriptions and terms.

Basic insurance concepts were generally understood by the public, Sonnet found in its study. Some 90% of the survey’s respondents understand insurance fundamentals, such as the term “deductible,” and 80% have even saved enough money to cover this in the event of a claim.

However, some terms continue to baffle consumers.

Those confusing terms include:

• Sewer backup – 21% said that they are unfamiliar with this term
• Overland flood insurance – More than a quarter of respondents do not have a basic understanding of this
• Identity theft coverage – 40% say they are unsure if they are covered for identity theft through their policies
• Comprehensive coverage – Over a quarter of respondents are unaware of the benefits of comprehensive insurance
• Collision coverage – Only 44% had a full understanding of this concept
• No-fault insurance – Only 33% know what this term really means

DIG Insights conducted the study for Sonnet Insurance, surveying 1,260 Canadian adults, excluding those living in Saskatchewan, Manitoba, Newfoundland and Labrador, Northwest Territories, Nunavut, and Yukon. The survey was conducted from October 15 to October 20, 2018.

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