Nearly one in every four people have never purchased home insurance and the majority of those who do have never updated the sum they are insured for, a survey has found.
The survey, carried out by the Malta Financial Services Authority, found signs of significant confusion among consumers when it comes to home insurance, with many unable to distinguish between buildings and content insurance and just under one in three unable to name their insurance underwriter.
Links between bank loans and home insurance cover remain strong: more than 44% of respondents bought their home insurance policy when taking out a loan to buy a house, and 56% said they only bought the policy because it was a prerequisite for their home loan.
Home loan requirements were reflected in the building insurance sums respondents said they are covered for, with more than 50% saying they took out a policy for the sum stipulated by their bank.
People with contents insurance, on the other hand, are more likely to select a more accurate insurance sum to ensure their claims can be paid in full.
More than half of those with home insurance – 54% – say they have never updated the sums they are insured for, with younger respondents less likely to update their policies than older ones.
But the survey also found that respondents appeared to appreciate their insurance cover, with almost 70% saying they planned on maintaining their policy after they paid off their loan and the 30% who have made at least one insurance claim reporting an average satisfaction score of 3.96 out of 5.
Consumer knowledge of insurance is mixed. While 70% of respondents could name their underwriter, 12% said they could not while 18% could only name the insurance intermediary, rather than underwriter.
Knowledge of home insurance is poor, the survey found. More than one in four said that buildings insurance would cover the cost of freezer items that perish following a power outage while 42% listed a wedding ring as being automatically covered by contents insurance. Neither is usually the case.
Researchers surveyed 700 respondents in the last three months of 2020, using telephone interviews and online surveys.
Respondents included people who live in a house they own, people who rent their home and people who have purchased a property with the intent of living in it but are currently living elsewhere.
The fieldwork, which was carried out in the last quarter of 2020, consisted of telephone interviews and online surveys with 700 respondents, who either own the house they live in (with or without a mortgage), do not own the house they live in but have purchased a property (with or without a mortgage) with the intent that it will be their home in the near future or are renting the house they live in.
Emily Benson, head of conduct supervision at the MFSA said that the authority "seeks to identify and address information gaps within various groups of the community, to enable them to make informed decisions and enhancing their trust in the financial services system".
In a statement, the MFSA said it would take a closer look at the survey results, further educate consumers about insurance products and review the regulatory framework to see whether any changes are needed to fix shortcomings identified in the survey.