Test your insurance knowledge at www.metlife.com/insurancequiz.

Despite many consumers reporting that they’re willing to pay more for insurance to gain better coverage and peace of mind, many Americans still have misconceptions about what their insurance policies provide. These findings come from the second of a two-part “Insurance Literacy” survey, conducted by Zogby International for MetLife Auto & Home, testing consumer knowledge of auto insurance basics. The survey revealed numerous surprises, including that more than half of Americans (52%) mistakenly believe if their new vehicles were totaled only a few weeks after purchasing them, insurance would pay for its full replacement cost, even though most auto insurance carriers subtract for depreciation and a deductible, potentially resulting in thousands of dollars in out-of-pocket expenses. The good news: these misconceptions and surprises can be avoided by simply increasing one’s understanding about auto insurance coverage, according to Bill Moore, president of MetLife Auto & Home®.

“The findings suggest that most consumers want more than just basic coverage from an auto policy, they desire broad protection and want to avoid costly surprises,” said Moore. “An important way to secure this peace of mind is by truly understanding what’s actually covered – and not covered – under your auto insurance policy. That can make all the difference at the time of a claim.”

Common Misconceptions
When it comes to understanding one’s automobile, the MetLife Auto & Home Insurance Literacy study revealed ten critical questions consumers need to ask when thinking about auto insurance:

  • Is it possible to owe more on a totaled vehicle than it is actually worth? Yes. Although most Americans understand what being “upside down” on a home mortgage means, many are unaware it also happens with auto loans. Fully half (50%) of respondents surveyed didn’t realize it was possible to owe more than a vehicle was worth at the time of an accident, leaving them responsible for paying the difference at the time of a loss, unless “gap” insurance were purchased.

  • If I totaled a leased vehicle, would my insurance company replace it and pay off the lease? Maybe. When asked, 57 percent weren’t sure whether their auto insurance would replace a vehicle they were leasing and pay off their lease obligation, if the vehicle were totaled. However, similar to those who bought a vehicle, leasers also need to purchase gap insurance to avoid this expense.

  • After an accident, will my insurance pay the full replacement cost to replace batteries, tires, and shocks? Probably not. More than half (56%) of consumers incorrectly believed that if their vehicles were involved in accidents, their insurance would pay the full replacement cost for items, such as batteries, tires, and shocks. Most – although not all – policies take depreciation into account when determining payment amounts on these items. Hybrid owners, take note: those policies also pay hybrid batteries on a depreciated basis, despite their high cost.

  • If my MP3 player or cell phone were stolen from my vehicle, would my auto policy cover the cost to replace it, or the amount I paid to download music, ring tones, etc.? It depends on the policy. Of those asked, 33 percent believed their iPods, MP3 players, or cell phones would be covered under their auto policies, if stolen from their vehicles. 39 percent weren’t sure if the data on those electronics (music and ring tone downloads, etc.) would be covered. None of these items are covered under most standard policies: instead, they’re covered by homeowners, condo, or renter’s insurance.

  • After an accident in a rental vehicle, would my insurance company pay the full cost of the claim for damages submitted by the rental agency? It depends on the policy. When it comes to accidents in a rental car, 26 percent of those surveyed believed their insurance company would pay for the rental company’s loss of income while the rented car was out of service. However, although standard auto policies do cover the damage to the rental vehicle, most insurers do not cover other items, such as loss of income, extra fees, or claim-handling expenses that rental companies often incur after a loss. Again, some do.

  • If I rented a mover’s truck to transport personal property and it was involved in an accident, would my auto insurance pay for it? It depends on the policy. More than one-third (34%) of consumers believed that their auto insurance would cover damage to a mover’s truck, and forty percent aren’t sure. The reality is that it depends on your coverage; so, be sure to confirm with your carrier that your policy covers truck rentals before pulling out of the lot.

Opportunities to Save Money

In addition to consumer misconceptions about coverage, the survey also revealed a number of untapped discounts and cost savings that many policyholders currently overlook. These include:

  • Do I need to purchase additional insurance when renting a car? Probably not. Although fully 28 percent of those asked indicated they purchase insurance from the rental car company when renting a car, most auto insurance policies and credit cards extend rental insurance benefits to customers, although the extent of what’s covered may vary. This overlap likely costs renters anywhere from $9-19 per day on average.

  • Can I get an insurance discount for shortening my commute? Yes! While most people (93%) knew they could get an insurance discount for a good driving record, only 63 percent knew that discounts are also available for drivers who shorten their commuting distances. Most insurance companies provide savings for customers who carpool or limit travel below a certain number of miles per year.

  • Can I get an insurance discount for buying coverage through a program offered at my workplace? Yes! Only 19 percent of those surveyed knew they could get a discount by purchasing auto insurance through programs offered at their workplaces . In fact, people can save up to 28 percent, depending on their prior carriers, simply by purchasing insurance through a workplace program.

  • Can I get an insurance discount for having a membership in a group or association? In many cases, the answer is yes – but only 3 percent of people knew that many associations offer access to group auto insurance programs with group discounts as part of their membership benefits. 

Flight to Quality
The MetLife Auto & Home Insurance Literacy Survey also debunked the idea that most consumers base their auto insurance decisions solely on price. In fact, Americans appear increasingly concerned about the actual protection they are receiving for their premium dollars. Of those surveyed, 77 percent said they were willing to pay more for better coverage and peace of mind, versus 17 percent who indicated they simply wanted the cheapest option available.

Want to test your knowledge of auto insurance and compare your answers to those who were surveyed? MetLife Auto & Home invites consumers to visit www.metlife.com/insurancequiz.

The MetLife Auto & Home auto insurance survey sample consisted of interviews with 1,203 adults who have automobile insurance, and who are living in households with telephones. The interviewing was conducted May 26 to June 9, 2010.

Zogby International is a public opinion, research, and business solutions firm with experience working in 65 countries around the globe. Founded and led by John Zogby since 1984, Zogby International ranks as one of the industry's leaders thanks to its reputation for superior accuracy and reliability. Zogby specializes in telephone, Internet, and face-to-face survey research and analysis for political, corporate, non-profit, and governmental clients. The firm is headquartered in Utica, New York, with offices in Washington D.C. and Dubai, United Arab Emirates.

The companies operating under the MetLife Auto & Home brand, affiliates of MetLife, Inc. (NYSE: MET), are, collectively, one of the nation’s leading personal lines property and casualty insurance providers, with more than 2.7 million policies in force. For more information about MetLife Auto & Home, visit MetLife’s Web site at www.metlife.com.


David Hammarstrom