Clever Consumerism #2: Car Insurance

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OH EIGHT HUNDRED DOUBLE OH…..
Photo by Rebecca Claire, LibFem.com // All Rights Reserved

Insurance policies are something which seem to confuse every single person who tries to take one out. Real time pricing, fees and premium hikes are a minefield and timing is everything. In a non-advisory financial industry, seeking advice can be difficult. If only you had a professional insurance broker to give you some top tips on insurance!

All opinions are of course my own.


WHO ARE UNDERWRITERS?

Starting with the basics… the underwriter sets values on each piece of ‘rated’ information on their insurance policies, ie. address, driving experience, motoring convictions, value of vehicle etc. Think of it like a points system. Each extra bit of risk is a point.

Driveway overnight? Risk of theft. Commuting with your vehicle? More likely to be complacent with your driving. Your price is based on these points and sometimes a certain factor might be a total no go for an underwriter. These can vary widely across the insurers and one might offer you a price ยฃ500 different to another. It happens. Sometimes you’ll get a no quote and none of the underwriters will offer a policy.

WHO IS THE BROKER?

The broker is the company who arrange the customer base for the policies. They don’t necessarily profit from your premium because that is held for claim payouts, but they bring in funds from things like optional products with fewer claim rates. Often they lose money in new business and make it back later. The broker may work with one single underwriter or several so quotes can vary massively even from the same broker. 

REAL TIME PRICING

Most car insurance companies quote based on real time pricing although some update much faster than others. You can purchase (in full or by direct debit) an insurance policy as far as 30 days in advance of the start date and in most cases the price is lower when the policy is set up a week or more in advance.

The underwriters are rating almost all of the information you give them and this includes the start date. Do you think people who leave their car insurance until 5pm on the day it’s due for renewal (so have been uninsured all day) are less risky or more risky than those who sort it out 2 weeks in advance?

EXCESS

If I hear one more person call an excess an access I’m gonna drop-kick them in the face.

Your excess is what you’re agreeing to contribute towards the cost of a claim. Some insurance companies promise this will be repaid to the customer if they settle as non-fault claim although others will only reimburse you when the third party admits full liability and those two do not mean the same thing.

I’ve had a few people ask me before what the difference is between the voluntary and compulsory excess. If you need that answering then I’m afraid you’ll need directing to a dictionary for the meaning of the words Voluntary and Compulsory or even this Wiki page on How to Develop Some Common Sense.

On the more reasonable subject of why you might pay a voluntary excess; it can sometimes reduce the cost of your premium. It is of course worth double checking before you agree a voluntary xs of ยฃ1000 and have to pay it when it only saved you ยฃ18 on your premium. 

PROTECTING YOUR NO CLAIMS DISCOUNT

If you protect your no claims discount, you will keep your certain percentage of discount even after a certain number of fault claims. It doesn’t stop your premium from increasing because you still have to declare all claims on your policy but it does mean you still have that same percentage off the total amount.

The math is almost impossible to work out its value but protecting it can be useful should you make any windscreen, fire or theft claim which almost always count as fault claims because your insurer is the one paying out. Non fault is only for when somebody else’s insurer pays.

TYPES OF COVER

Third Party Only

As the name suggests, this will cover the third party ie. anybody else except for you that suffers a loss during an incident. Your insurer could have to pay millions out in damages if you were to cause a multi car pile up.

Third Party, Fire & Theft
Pretty self explanatory 

Comprehensive
Most policies are comprehensive and this can sometimes include the most basic of policy. Comprehensive simply means that your vehicle is covered as well as the third party. It does not necessarily mean that you or your windscreen, personal belongings, keys, or stereo is covered. 

Fully Comp 

Doesn’t exist. Logically means ‘everything is covered’ which obviously isn’t possible. Nobody gonna pay out should you set your own car on fire, drink drive or leave your keys in the car and walk off.


TOP TIPS

  • Use comparison sites for the best prices
  • Buy in advance, last minute purchases can be hectic
  • Ask for a better renewal price before hastily moving company

I hope you found this post helpful! Please comment below if you’d like any more information on the above!

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