Cedric Stephens, Contributor
The question-answer format that has been a feature of this column since its inception in 1997 — which I am not too scared now to admit was patterned off the very popular The Sunday Gleaner Outlook Magazine's sexual advice column — will be abandoned today.
This article will instead be used to administer a test. The quiz is designed to assess how much readers know about insurance.
Statistics compiled by the Insurance Association of Jamaica (IAJ) in 2010 show that almost J$4.5 billion is spent each month on various kinds of insurance. These coverages protect the lives, health, property and income of individuals and companies, and also secure retirement income.
Three things triggered the Insurance Literacy Quiz. The first was a Financial Services Commission (FSC) study that was commissioned last year. It assessed the level of financial literacy in Jamaica and covered insurance, pensions and securities, which the FSC regulates.
Literacy, as defined in the study, "is considered to be a combination of financial knowledge, attitudes and behaviour". The researchers found that in term of financial knowledge, "less than half of Jamaica's respondents gained a high score."
A 2011 study conducted by Germany's global insurance giant, Munich Re, was the second source of information. That investigation sought to measure the effects of disasters on vulnerable populations in four Caribbean countries, including Jamaica. 96.3 per cent of the island's population, 94.9 per cent of the national territory, and 96.3 per cent of GDP were found to be exposed to extreme weather events which caused economic losses of US$2.6 billion.
The third trigger was the website of the Insurance Bureau of Canada — www.ibc.ca. IBC is the Canadian equivalent of the IAJ. The site invited consumers to take, what was described as an insurance literacy quiz. That quiz was adjusted for local conditions.
A large part of our assets are tied up in houses and cars. The FSC study did not specifically address the subject of insurance literacy.
Insurance plays an important role in helping persons to cope with disasters. It is especially significant, given the island's vulnerability to events like hurricanes and earthquakes and the findings of the Munich Re study.
In an effort to get feedback from readers about how much they know about insurance, please participate in the following quiz:
1. In a typical policy covering a house or contents, is the insured property usually insured against earthquake, hurricane and flood? YES or NO.
2. What is the excess (or deductible) for loss/damage arising from earthquake, hurricane and flood - (a) None; (b) 10 per cent of claim or (c) two per cent of the sum insured per item?
3. Which of the following could save you money on your home insurance premium?:
e) Increasing your deductible or your share of the cost of the claim
f) Insuring your home and car(s) with the same insure
g) Installing a monitored burglar/fire alarm system
h) All of the above
4. Should insurance against earthquakes, hurricanes and floods be included in all policies that provide protection for property? TRUE or FALSE
5. Replacement cost insurance in property insurance policies means that there is no allowance for depreciation. TRUE or FALSE
6. Do insurers provide protection against Acts of God? YES or NO
7. I live in a rented house. Should I insure my household contents? YES or NO
8. What is the Average Clause?
9. What is a pre-existing condition?
10. Do health insurance plans treat mental and physical illnesses equally? YES or NO
11. Can I transfer my motor insurance to the buyer when I sell my car? YES or NO
12. Does my motor policy protect me when I am driving my friend's vehicle? YES or NO
13. Am I required to tell my insurance company when I pay a fine for speeding? YES or NO
14. What are some of the benefits provided by a comprehensive motor policy:
f) Loss or damage to personal effects stolen from a locked vehicle? YES or NO
g) The cost of hiring another vehicle when the insured vehicle is damaged in a collision? YES or NO
h) Compensation to passengers for injuries sustained in an accident? YES or NO
i) Compensation to a driver for injuries sustained in a collision? YES or NO
j) The costs of defending manslaughter charge? YES or NO
Please submit answers by email no later than Wednesday, October 23. Entries from employees of insurance companies and brokers will be excluded. Participants must disclose their full names, postal and email addresses and cell phone numbers.
The responses will be analysed and the results of the analysis and the email addresses of the winners will be published at a later date.
Cedric E. Stephens provides independent information and free advice about the management of risks and insurance. Email firstname.lastname@example.org. SMS/text message to 812-7233.