The Hidden Risk: Most Australians Haven’t Read Their Car Insurance Policy

Confidence vs. Reality in Car Insurance Knowledge

A new report from one of Australia’s largest car insurance providers has revealed a concerning gap between motorists’ confidence in their insurance knowledge and their actual understanding of what their policies cover.

Despite 83% of Australians believing they understand their car insurance policy, insurer Youi’s 2025 Under the Hood Report shows that only 25% have read their Product Disclosure Statement (PDS) in full—the very document that outlines their coverage, exclusions, and responsibilities.

Chris Jarrett, Executive General Manager of Claims at Youi, says this lack of engagement could have serious consequences.

“Australians are putting their hard-earned dollars towards car insurance as a safety net. Knowing what your policy covers you for is key to feeling confident if you need to make a claim.”

Who’s More Confident?

The report highlights interesting demographic trends:

• Men (88%) are more confident in their insurance knowledge than women (78%).
• Gen Z has the lowest confidence (78%) but is the most likely to have read their PDS in full (31%).
• Baby Boomers and Pre-Boomers are the most confident (85%) but less likely to have read their full policy.

The Reality of Making a Claim

Beyond policy knowledge, many Australians are unsure about what to do in the event of an accident. While 80% of respondents believe they’d know what steps to take, fewer than half fully understand the claims process.

In fact, 47% of those who have made a claim needed external help—from friends, family, online sources, or their insurer—to navigate it.

With over 21 million vehicles on Australian roads and more than half the population having made an insurance claim, Youi is urging Australians to be proactive in understanding their policies before an accident occurs.

“Experiencing a car accident is stressful. And the last thing Aussies need is additional stress from uncertainty in their car insurance policy,” Jarrett said.

Making Insurance Simpler

One of the biggest barriers to understanding insurance policies is the complexity of the language used. Many Australians find these documents too jargon-heavy, deterring them from fully engaging with their coverage details.

To address this, Youi has committed to simplifying its policy information and has earned a Plain Language Gold Certification (PLGC)—an accreditation awarded to documents that meet high standards of clarity and accessibility.

Rising Premiums: Another Challenge for Drivers

While improved clarity in insurance documents is welcome, it comes at a time when car insurance premiums in Australia have surged by 42% since 2019, reaching an average of $1052 in 2024.

The rise in premiums is driven by: ✔️ Increased vehicle repair costs ✔️ More expensive replacement parts and labour ✔️ The growing complexity of modern vehicle technology

Adding to the financial burden, the Insurance Council of Australia (ICA) reports that the average claim size has also increased by 42.2% over the same period—more than double the approximate 20% inflation rate.

The Bottom Line: Read Your Policy Before You Need It

Understanding your car insurance policy is just as important as having one. Before an accident happens, take the time to review your coverage, know your exclusions, and make sure you’re not caught off guard when it matters most.

Because when it comes to car insurance, what you don’t know can cost you. 🚗💰

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Credit: CarExpert.com.au