Insurance has been around a long time. In fact, there is evidence that insurance existed in the Bronze Age Middle East. Perhaps that is why there are so many Insurance Myths. Many people believe all sorts of inaccurate things about buying and using insurance policies. Why is this the case, and who can do more to explain how insurance really works?

Faults

More than half of people who took part in a recent survey by Which? had inaccurate ideas about what ‘Fault’ entails. In insurance terms, Fault refers more to liability than it does to responsibility for an accident. Liability does include accidents that you are responsible or partly responsible for – but this is not the best definition. Fault also refers to cases where responsibility has not been assigned, or if insurers have agreed to split the difference. As one of the most common insurance myths, the misunderstanding of Fault is indicative of how public perception of insurance works.

Rejections

Many people believe all sorts of statistics about rejection rates for claims. There is a common conception that insurers refuse to honour all sort of claims. However, rejection rates are vastly lower than most people believe. A test by Which? found that 37% of people believed the untrue statistic that 4 in every 10 travel insurance claims is rejected. In reality, the figure is 13%. That is still vastly higher than other types of insurance – such as car insurance, where only around 2% of claims are rejected. Insurance myths such as this show the depth of mistrust between the insurance industry and consumers.

Reasons

There has to be a reason behind why many people believe insurance myths. Myths don’t simply spring fully formed into existence. Which? did some research of their own into why people who believed inaccurate things believed them. By far the most common reason that people believe insurance myths is because they have always believed them, or because their friends and family have told them so. This means that these myths are simply taken as dogma, rather than being questioned. What can the insurance industry do to counter insurance myths? Perhaps most significant would be to make it clearer what insurance industry terms mean. If customers better understood the reality of their policy, they might not believe so many myths. At GAP Insurance Today, we try to make all the policies we sell as clear as possible. We explain what our policies actually mean, and what they cover. We try to make sure that our policies are myth-free.