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Insurance: A Misunderstood Industry
Motor Insurance - Comments & Tips
Member Name: fiisch
Motor Insurance - Comments & Tips
Advantages: Potential for good deals, excellent providers and good covers
Disadvantages: Lots of cowboys in the industry, widely misunderstood
Insurance, particularly motor, gets bad press. The Sun has recently unleashed shocking headlines claiming insurance has risen by 40% in just the last year. This is down to the vast majority having little idea about the thought processes behind their premiums and do not understand the market. However, some of this criticism is deserved, with some companies trying to exploit the complex nature of the subject by baffling clients with jargon and raising renewal premiums in the hope customers won't notice and blindly renew.
I am employed in the insurance industry and have seen both ends of the market. Previously, I worked at a very popular provider currently topping many charts in the comparison website market. The competition in this sector is fierce, and some companies have dramatically exceeded their expansion expectations. However, greed dictates that they expand their sales teams much faster than customer service/claims departments thus leading to a host of bad reviews and battles with the Financial Ombudsman.
The number one consideration for the majority of customers is price, which is a mistake when considering insurance for the most powerful weapon you own. Many of these companies will offer little assistance in a claim, and deliver stripped-down policies that actually give little cover, even under the guise of "fully-comprehensive" - a very loose term which does not refer to the additional benefits of the policy.
I now work at a major insurance brokers who offer much better assistance, but at a premium. They have a very different clientelle and are not competitive financially. The problem is the rapid expansion of comparison sites has made everyone an expert, and customer's ring fiddling with various factors trying to reduce the premium blissfully unaware of the pitfalls. For example, a customer at a previous company decided to insure his BMW M6 (worth around £50,000) as being kept in the garage. This saved him about £5 on a £1000 policy, as where the car is kept (i.e.: driveway, garage, on the road etc. as opposed to postcode) generally makes very little difference to the premium. When his sleek German saloon was pinched during the night, the insurance company refused to pay out as the car had been taken from the driveway.
The moral is be truthful. Don't omit details - even non-fault claims need to be disclosed and can impact on the premium. Don't try and second-guess insurance either, as factors which you believe may make the insurance cheaper may actually increase the premium. For example, someone with a low no claims bonus may actually benefit from declaring a claim, or in some circumstances a car kept on a driveway is viewed as a lower risk than one kept on the driveway.
I have been studying for CII qualifications for a couple of years now and the reasoning behind the pricing is impossible to explain in a short article. My advice for choosing the right motor insurance policy:
1/ Consider the cover - cheapest is not always the best value for money
2/ Do not disregard optional cover. Sometimes the add-ons are almost worth more than the insurance policy itself, though beware those that are in place just to squeeze extra profit for the company.
3/ Do some research on the company. Reviews on the Internet are unlikely to be accurate, as you are only reading one side of a story and all insurance companies have had unhappy customers at one stage or another. Instead, examine an insurance companies place in the market, and ring their claims/policy support department before buying. Whilst you may be able to get through to the freephone salesline in seconds, the other departments may have lengthy waits on premium-rate numbers.
4/ Don't second-guess what will make the insurance cheap - be brutally honest. E.g.: if you move house to a more affluent area, don't assume your premium will reduce.
5/ Shop around. Whilst my job is to try and retain customers, outside work I would always recommend checking the rest of the market before renewing, as generally there are better discounts with other companies than your own, but make sure you are getting like-for-like cover. That said, some companies e.g.: brokers will look to reward customers and will look after long-serving clients
6/ If you don't understand insurance, it is unwise to leave your long-serving insurer and get a relative/friend to get a quote online for you. Chances are they won't get your details accurate. Instead, try an insurance broker. They will do the same job for you, but ensuring your cover is valid and will not necessarily charge a premium for doing so.
I hope this is helpful. Feel free to leave a comment if you need any help with finding a quote.
Summary: Read, read and read some more! Don't assume anything and examine your policy!
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