Survey reveals common insurance misconceptions

Will an insurance payout cover the cost of replacing your written-off car? And if you write about your holiday plans on social media, will it void an insurance claim if your home is burgled while you are away? These and other questions were recently put to 2,099 people by Which? to identify common misconceptions about insurance policies.

The consumer group found that people believed fiction over fact about half the time.

Half (49%) of those participating in the survey mistakenly believed that 'no claims discount protection' freezes your premiums in the even of a claim. In fact, the discount is just a percentage off your premium -- and the premium itself may go up as the result of a claim.

More than a third (35%) believed that if your second-hand car was stolen or written off, your insurer would pay you the required amount of money to buy a replacement of the same make and model. However, insurers actually base their payout on the car's estimated trade value immediately before the claim, taking into account its mileage, history and condition -- meaning it might cost more to buy a replacement.

Just 17% of respondents knew that if you cancel your insurance within the 14-day 'cooling off' period, your insurer is allowed to charge you a cancellation fee.

And a quarter (25%) of respondents did not realise that home insurers are allowed to turn down a burglary claim if you've detailed your holiday plans on social media. This is covered in the general conditions of most insurance policies, with holders expected to take 'reasonable care' to prevent situations that would lead to a claim occurring.

Commenting on the findings, Which? money editor Jenny Ross said: "When it comes to insurance, unpicking fact from fiction can be tricky, and the complex language, exemptions and loopholes can trip up even the savviest customer.

"Insurance is there as protection should the worst happen so it is important not to make assumptions or unquestioningly accept what others tell you -- instead, do your research and check with your insurer if anything is unclear."

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