Insurance: Only one-third of Americans understand policies 'very well'

Consumers should shop around, check insurance coverage for best value

With each new year, Missourians pledge to "exercise more" or "lose weight," but a recent national survey indicates that individuals might want to make an effort to learn more about their home, auto and health insurance coverage.

According to a news release from the Missouri Department of Insurance, the national survey found only 33 percent of Americans said they understand the details of their policies "very well" even though insurance protects their most valuable resources.

When it comes to insurance, knowledge is a consumer's best policy particularly considering steep price increases in recent years.

"In Missouri, for example, average premiums have risen more than 67 percent for HMO plans in the past five years and 46 percent for homeowners coverage just since 2001," said Scott Lakin, director of the Missouri Department of Insurance.

"Especially in recent tough economic times, smart consumers are looking for true value the best price and service that meets your family's most pressing insurance needs."

During national Get Smart About Insurance Week, Jan. 19-23, Lakin encouraged consumers to beef up their knowledge about coverage.

He offered the following tips for achieving that goal:

Join the 3 million annual visitors to MDI's Web site at www.insurance.mo.gov, which provides up-to-date consumer information when buying health, auto, home or other insurance coverage.

Schedule a routine "check-up" with a local insurance agent at least once a year. Particularly for homeowners coverage, consumers should inquire about savings by opting for higher deductibles.

Take advantage of the MDI Web site, when necessary, to seek help with improper claims handling and policy sales. Missourians also can call 1-800-726-7390 toll free to ask questions or begin the official complaint process. Preliminary figures for 2003 show that MDI investigated 5,994 official complaints about insurers or agents and recovered $13.2 million for consumers.

Shop around for identical products and services. Missouri does not regulate rates for virtually any line of insurance and relies on competition to keep prices low.

But MDI's Web site, including a special homeowners shopping center, and brochures have information on comparative premium information and special discounts that sometimes are overlooked.

Telephone survey

To gauge Americans' understanding and perceptions of their insurance coverage, the Kansas City-based National Association of Insurance Commissioners comprising all state insurance directors including Lakin commissioned a follow-up telephone survey of 1,009 adult consumers in 2003.

Respondents who thought they had the right amount of coverage increased over the previous year from 67 percent to 72 percent.

However, only one-third of consumers said they understand the details of their coverage "very well," or the same level as the year before.

"This information shows that many Americans may have a false sense of security when it comes to their insurance coverage," Lakin said.

The youngest adults, ages 18 to 24, are least likely understand their policy details very well (20 percent).

To help this age group, and even younger Missourians, the MDI Web site has added a special area for teens get basic insurance education.

"Young adults particularly need education about the essentials of insurance coverage, as they begin setting up households and families," Lakin said.

Understanding of insurance issues increases with age. Almost half 45 percent of the survey participants 65 and older say they know their insurance details very well although they face more questions in making decisions about such areas as health coverage.