Insurance illusion: 79% of Indians unsure what their policies actually cover, says survey

A new survey by InsurTech platform CoverSure has found that 79% of Indian policyholders are unsure whether their insurance offers adequate coverage, pointing to a widespread issue of under-insurance and low policy literacy.

The findings, released on June 25 ahead of National Insurance Awareness Day, are based on responses from over 5,000 individuals across metro and Tier 2 and 3 cities. While insurance ownership is on the rise—71% of respondents hold between two to five policies—comprehension of those policies remains alarmingly low.

According to the survey, 65% of policyholders admitted they have limited or no understanding of key insurance details, such as benefits, exclusions, and claims processes. Only 35% of respondents said they fully understand the terms of their policies.

Family members fare even worse when it comes to insurance awareness. “Sixty percent of dependents don’t even know they’re covered under any policy, and just one in ten can accurately describe the coverage or benefits available to them,” the report stated. This lack of knowledge often leads to missed claims or underutilisation of policy benefits.

Poor document management also adds to the confusion. The study found that people still rely on fragmented systems: 29% use physical files, 26% use spreadsheets, 24% depend on SMS alerts, and 21% save documents in digital folders. This disjointed approach can delay claims or make policy renewals difficult, especially during emergencies.

When it comes to seeking insurance help, the study revealed a behavioural disconnect. While 36% prefer human advisors and 26% are open to digital assistance, 38% believe they don’t need any help at all. Yet, most of these self-reliant respondents lack clarity about their actual coverage. This contradiction suggests that a sizable chunk of the population may be operating under a false sense of security.

Saurabh Vijayvergia, Founder & CEO of CoverSure, stressed the urgency of bridging this gap. “This survey shows that focusing on insurance penetration alone isn’t enough. What people need is insurance that they can understand and use effectively. If policyholders don’t know what’s covered or how to use it, the very purpose of insurance is defeated,” he said.

The report calls for increased efforts to simplify policy language, promote digital tools that enhance transparency, and encourage open discussions within families about insurance coverage. According to CoverSure, empowering consumers with the right knowledge and tools is the only path to ensuring meaningful financial protection.