Quiz pinpoints motor-insurance knowledge gap

Cedric Stephens insurance HELPLINE

Today's article will analyse and discuss the responses of those readers who participated in the insurance literacy quiz which was published on October 20.

When the earlier piece was submitted for publication, I offered token prizes - in the form of cell-phone credit totalling J$2,500, excluding GCT - to three persons who recorded the highest quiz scores. The editor nixed the idea.

She had it on good authority that the offer of symbolic prizes required the prior approval of the Betting, Gaming & Lotteries Commission (BGLC). I agreed with the editor's decision to delete the references to prizes. It would cost me more than the proposed 'prize money' to review the legislation and/or to obtain BGLC's approval and/or seek an exemption.

Only eight persons submitted answers to the quiz. Had the financial incentives that I had originally offered been printed, I guess that at least 100 persons from all across the island would have participated. As it turned out, only one person who lives in a rural town sent answers.

The limited number of participants was a blessing in disguise. The analysis, marking and interpretation of the responses of readers took far longer than I had expected. On the plus side, however, the quiz caught the attention of the industry lobby group, The Insurance Association of Jamaica, which for some reason decided to place it on its 'blog' without observing all of the usual protocols which have since been corrected.

KEY FINDINGS

The quiz was designed to test readers' knowledge of three types of insurance: property (house and contents), health, and motor. Fifty-seven per cent of the quiz was about property, 14 per cent about health, and 28 per cent related to motor.

One of the main findings of my analysis of the test scores is that surprisingly, most of the persons who participated appear to know more about property and health insurances than motor. Also, most participants do not have a very clear idea what risks a comprehensive policy does not cover.

The data points in the accompanying graph plot the percentage of participants who submitted correct answers to the 14 questions posed in the quiz. One question had five parts, requiring 18 responses in total.

QUESTIONS AND ANSWERS

1. In a typical policy covering a house or contents is the insured property usually insured against earthquake, hurricane and flood? Yes or No? Answer: Yes

2. What is the excess (or deductible) for loss/damage arising from earthquake, hurricane and flood? (a) None (b) 10 per cent of claim (c) two per cent of the sum insured per item Answer: C

3. Which of the following could save you money on your home insurance premium?

a) Increasing your deductible or your share of the cost of the claim

b) Insuring your home and car(s) with the same insurer

c) Installing a monitored burglar/fire-alarm system

d) All of the above

Answer: D

4. Should insurance against earth-quakes, hurricanes and floods be included in all policies that provide protection for property? Yes or No?

Answer: Yes.

5. Replacement-cost insurance in property insurance policies means that there is no allowance for depreciation. True or False?

Answer: True.

6. Insurers provide protection against acts of God. True or False?

Answer: True - An act of God is an accident or event resulting from natural causes, without human intervention or agency, and one that could not have been prevented by reasonable foresight or care, for example, floods, lightning, earthquake, or storms.

7. I live in a rented house. Should I insure my household contents? Yes or No?

Answer: Yes.

8. What is the average clause?

Answer: A clause in an insurance policy that restricts the amount payable to a sum not to exceed the value of the property destroyed and that bears the same proportion to the loss as the face of the policy does to the value of the property insured.

9. What is a pre-existing condition?

Answer: Any personal illness or health condition that was known and existed prior to the writing and signing of an insurance contract. Health or life-insurance policies will often identify a customer's pre-existing conditions before writing an insurance contract for that person, and will typically not cover pre-existing conditions until a specified period of time has elapsed. In some cases, pre-existing conditions may not be covered at all.

10. Do health-insurance plans treat mental and physical illnesses equally? Yes or No?

Answer: No

11. Can I transfer my motor insurance to the buyer when I sell my car? Yes or No?

Answer: No

12. Does my motor policy protect me when I am driving my friend's vehicle? Yes or No?

Answer: No

13. Am I required to tell my insurance company when I pay a fine for speeding? Yes or No?

Answer: Yes

14. What are some of the benefits provided by a comprehensive motor policy:

a) Loss or damage to personal effects stolen from a locked vehicle? Yes or No? Answer: No

b) The cost of hiring another vehicle when the insured vehicle is damaged in a collision? Yes or No? Answer: No

c) Compensation to passengers for injuries sustained in an accident? Yes or No? Answer: Yes

d) Compensation to a driver for injuries sustained in a collision? Yes or No? Answer: No.

e) The costs of defending man-slaughter charge? Yes or No? Answer: Yes

A reader who gave her email address as peaceinside@hotmail.com scored the highest mark of 91.6 per cent in the quiz. As soon as I made contact with her, I will be sending credit valued at J$1,000, plus GCT, to her cell phone. To all of the other participants, please accept my grateful thanks.

Cedric E. Stephens provides independent information and free advice about the management of risks and insurance. aegis@flowja.com SMS/text message to 812-7233