By BankingMyWay.com Staff

Does auto insurance automatically cover rental cars?
Can you own a house without homeowner’s insurance?

Those are a few of the sample questions included in a recent survey by the National Association of Insurance Commissioners (NAIC) that tested consumers on their basic insurance knowledge. The results were not encouraging for the industry: according to the NAIC, the average consumer flunked the test, answering an average of four out of 10 answers correctly, despite the fact that a majority of respondents initially felt confident about making decisions about their insurance.

An average score of 40% on the 10-question survey is a problem given that insurance is a major component of financial health.

“Now, more than ever, consumers need to be mindful of the impact their insurance decisions can have on their financial future,” NAIC Chief Executive Officer Terri Vaughan said in a press release. “By arming themselves with the facts — and improving their Insurance IQ — consumers can make sure they are adequately protected, without paying more than they should for that coverage.”

The survey found that Americans were misinformed about all the major insurance areas, from cars to health to home and life. For example: only 14 percent of respondents knew that the amount of life insurance typically recommended is five to seven times their annual salary. And no, car insurance doesn’t automatically over rental cars; 59 percent got that question wrong.

So how can you increase your insurance I.Q.? Step one is to start your research online. Many of the major insurance carriers, including Nationwide (Stock Quote: NFS), Allstate (Stock Quote: ALL) and Travelers Insurance (Stock Quote: TRV), offer online tips covering basics like how homeowners insurance works to how a teenage driver will affect your auto insurance premiums. NAIC provides its own consumer education website, Insure U, at www.insureUonline.org.

Alternatively, check out BankingMyWay.com for tips on finding the best car insurance, making sure you have enough home insurance and the importance of life insurance. There’s more about accident forgiveness for car insurance, gaps in homeowner’s insurance, and long-term care insurance over at MainStreet.com as well.

After reading up on some insurance basics, investigate BankingMyWay.com's Insurance Center to receive competitive rate quotes from the top insurance carriers in your area. Knowing what kind of insurance coverage you need will prepare to compare multiple rate quotes from leading providers, which is key in making sure you’re not overpaying for unnecessary coverage.

With quotes in hand, take some extra time to do research into the carrier and or agent that you're dealing with. NAIC reported that 90% of participants relied solely on recommendations from family and friends, and the group recommends following up with your state insurance department before signing anything.

Following these steps can certainly help you improve your score on the next insurance test.

— For more ways to save, spend, invest and borrow, visit MainStreet.com.