The research explored consumer experiences for the most commonly purchased general insurance products, including motor, home building, home contents and travel policies.
PDS not widely read when purchasing insurance
The Product Disclosure Statement (PDS) is a legal document that forms part of your insurance contract. It provides you with a full description of the terms and restrictions of the insurance policy. It documents the features, benefits, costs, exclusions and associated risks.
The PDS helps you understand the insurance policy and allows you to compare different policies so you can make an informed decision.
What the Insurance Council research found, however, is that most people don’t read the PDS at all when buying insurance.
Those most likely to read the PDS before purchasing a policy? Well, they are generally those who have previously made a claim.
So, if most people aren’t reading the PDS, how do they decide on which insurance policy to purchase?
According to the report’s findings, most consumers consider the price and level of cover as the only “detail” they need in order to make an informed decision.
Wide gap between perceived and actual knowledge
While most consumers feel confident that they understand their policy, comprehension was actually quite poor among those taking part in the study.
“An overwhelming majority (93%) of respondents did not feel they have any gaps in understanding. When prompted, most respondents indicated that they were completely or mostly confident in understanding the details of their policy.”
But when the researchers asked those same participants specific questions to test their knowledge of generic policy exclusions and limits, they found that: “There was generally a poor understanding of policy exclusions and limits, which is at odds with consumer confidence in their own understanding.”