Poll suggests Canadians don’t understand the basics of insurance

A surprising number of Canadians lack a basic understanding of some of the most fundamental concepts of insurance, according to research conducted on behalf of the Insurance Bureau of Canada (IBC).
In a study of 3,220 Canadians, undertaken by the research firm Pollara, only a small majority (58%) of respondents knew that when a person pays for home and car insurance, the insurance company pools the money with other people’s premiums in order to pay claims for all of a company’s customers.
A total of 41% of respondents incorrectly believed their money was:
set aside to cover future claims by the individual who paid the premium (14%);
used in some way unknown to the survey respondent (26%);
used in some other fashion (1%).
Only 28% of respondents correctly defined the word “indemnity” as “providing financial compensation for losses.”
Almost all (90%) of Canadian policyholders interviewed expressed confidence they had the right auto insurance coverage, even though 32% of the respondents said they had never read their insurance policy.
Among the most prevalent myths among Canadians about insurance is that a person’s health condition matters for the purpose of calculating car insurance premiums. Only 18% of Canadians knew that this to be untrue.
(Policyholders must only sign a declaration that they are medically fit to drive.)
Another error, believed by 40% of survey respondents, is that the colour of a car has a bearing on insurance premiums.