Car insurance is of course something most of us by as a 'grudge' purchase or to meet our legal requirements as law abiding citizens. That said statistics suggest one in ten drivers on the roads in the UK doesn't have motor insurance so obvioulsy not all of us feel the need to comply with the law! Even though insurance isn't something you might relish buying it's essential to have the right kind of cover and that you understand exactly what you are and aren't covered for. When it comes to the crunch - literally if you're unfortunate enough to have a smash! - the value of your insurance comes into it's own. This is the moment of truth when you discover whether that £30 you saved has actually cost you money as you don't have the cover you need.
Some key things to look at include -
The Policy Excess, or the amount of the claim you will be required to pay yourself. Young and high risk drivers are particularly at risk of getting caught out here. For example, if you have a £500 excess but you're beloved Ford Fiesta is only valued at £600 the value of 'full comp' cover is debatable.
Courtesy Car. Claims take take weeks to settle and if your car is taken away for inspection or written off and there are any complications in agreement of value how will you cope without transport?
Legal Expenses Cover. I'd advise as essential nowadays. The insurance cost of a few pounds is really great value for money. Some brokers will throw this in with your car insurance, others will try and 'up sell' it to you to make some more commission. Try asking for it to be included 'for free' - if the broker's making money on your main car insurance policy he can afford this.
Finally, look at the Claims Service. You will need 24 hours 356 days service and most offer this. The current big issue is 'UK Claims' or 'Offshore.' I wouldn't be put off by 'offshore' - we've all heard horror stories about Indian Call Centres but the reality is most are very well run and are strictly controlled by UK management. The whole industry is very tightly regulated by the 'FSA' (Financial Services Authority) and if things do go wrong you are in a very strong position as a customer - but this may all take time of course.
A few more things to think about then when you're searching for car insurance. Again my advice is start with the 'screenscrapers' and comparison sites but do your homework, know what it is you're buying and if in doubt pick up the phone to ask.
Sunday, 2 September 2007
Thursday, 30 August 2007
Your Home is Your Castle - Insure It!
Many UK consumers have adopted a casual and often 'it won't happen to me' approach to dealing with their home insurance policy, new research suggests. What shocked me recently in the news coverage of the terrible floods was the number of people stood knee deep in water inside their homes complaining 'we don't have any insurance.' Your home is your biggest and most valuable assett and you must protect it with adequate insurance!
A study carried out by Tesco Home Insurance indicates that over a third of homeowners who do have insurance do not familiarise themselves with the level of cover and terms of their policy. Over two-fifths of consumers also say that their contents insurance may not be sufficient cover. Allan Burns, head of Tesco Home Insurance, said: "We would urge all homeowners to read through their documents to familiarise themselves with the terms and conditions of the policy they have purchased."Tesco Home Insurance recommends that property owners shop around for the most competitive insurance deals, read their policy documents carefully and to keep insurers updated with any home changes which might impact upon a policy.Mr Burns said: "We want everyone to make an informed choice when buying their home insurance policy."
Even after the recent floods there are no real signs that the cost of home insurance is going to increase more than 5%. As with motor insurance, there are 'screen scrapers' and comparison websites to seek out the best premiums for you. Unlike motor insurance, however, there are real differences in the actual cover from a home insurance policy and it's critical you take the time to check you're insured for everything you need. This is where a good broker can come in - they can answer these questions for you. As an example, be careful of insurance terms like 'Valuables' - which usually refers to things like jewellery and paintings. Do you have cameras and items which you need to insure for use outside of the home? Is there a limit on 'Contents' - basically all of your wordly goods? Many insurers are now moving to 'unlimited' cover with their home insurance policies which means whatever the size of the claim you should have adequate cover.
At the very least, insure your Home and Contents for 'the basics' - the cost is so cheap you'll be a fool not to do this quite frankly! If you do have lots of valuables, antiques, art effects etc you may need a specialist policy -I'll write more about these later and where you can get the best cover and service.
A study carried out by Tesco Home Insurance indicates that over a third of homeowners who do have insurance do not familiarise themselves with the level of cover and terms of their policy. Over two-fifths of consumers also say that their contents insurance may not be sufficient cover. Allan Burns, head of Tesco Home Insurance, said: "We would urge all homeowners to read through their documents to familiarise themselves with the terms and conditions of the policy they have purchased."Tesco Home Insurance recommends that property owners shop around for the most competitive insurance deals, read their policy documents carefully and to keep insurers updated with any home changes which might impact upon a policy.Mr Burns said: "We want everyone to make an informed choice when buying their home insurance policy."
Even after the recent floods there are no real signs that the cost of home insurance is going to increase more than 5%. As with motor insurance, there are 'screen scrapers' and comparison websites to seek out the best premiums for you. Unlike motor insurance, however, there are real differences in the actual cover from a home insurance policy and it's critical you take the time to check you're insured for everything you need. This is where a good broker can come in - they can answer these questions for you. As an example, be careful of insurance terms like 'Valuables' - which usually refers to things like jewellery and paintings. Do you have cameras and items which you need to insure for use outside of the home? Is there a limit on 'Contents' - basically all of your wordly goods? Many insurers are now moving to 'unlimited' cover with their home insurance policies which means whatever the size of the claim you should have adequate cover.
At the very least, insure your Home and Contents for 'the basics' - the cost is so cheap you'll be a fool not to do this quite frankly! If you do have lots of valuables, antiques, art effects etc you may need a specialist policy -I'll write more about these later and where you can get the best cover and service.
Wednesday, 22 August 2007
Cheap Motor Insurance for Young Drivers
For young drivers, getting a good deal on motor insurance is a little tougher than for those with more experience and 'bonus' under our belts. It's not fair to tar all drivers with the brush of 'boy racer' but there are still those out there that earn this title and can spoil it for the rest!
So how can you reduce your motor insurance premium as a young driver? Whilst most insurers shy away from writing this type of business on their standard accounts there are certainly ways to get a better deal and save some money.
First of all recognise that as a young driver you are a more specialist risk. There are brokers out there with special schemes and insurer deals to save you money. Where a broker proves to an insurer they have a good track record and experience of the young driver market they will have better rates available. The market has now segmented further and there are sepcialist brands for young male and young female drivers - the innovative broker Fresh Insurance has brands like 'Ladybird' which are worth checking out. http://www.freshinsurance.co.uk/
Approach some brokers and ask if they offer a 6 month policy rather than annual. At the end of this you can can take out a full year policy and you'll have earnt 2 years bonus in just 18 months. Some brokers have access to 'age accelerator' deals - what this means is if you are 19 but only a few months away from 20 they can 'accelerate' you and give you the price a 20 year old would get - considerably cheaper!
Consider taking the 'Pass Plus' course and exam - http://www.passplus.org.uk/ Many insurers will give you a discount for this. A quick calculation will tell you that the cost may well be more than offset by the reduction in your motor insurance premium. The site lists insurers like Norwich Union and brokers such as Adrian Flux who can offer you premium flexibility with the Pass Plus.
Finally, think carefully about the car you buy if you're at that stage! Insurers have started to take a more sophisticated approach and even if you are a young driver buying a more sensible car says something about you and will be reflected in the price. Buy a hot hatch with go-faster-stripes and super-wide-wheels and you'll pay the price on your insurance!
So how can you reduce your motor insurance premium as a young driver? Whilst most insurers shy away from writing this type of business on their standard accounts there are certainly ways to get a better deal and save some money.
First of all recognise that as a young driver you are a more specialist risk. There are brokers out there with special schemes and insurer deals to save you money. Where a broker proves to an insurer they have a good track record and experience of the young driver market they will have better rates available. The market has now segmented further and there are sepcialist brands for young male and young female drivers - the innovative broker Fresh Insurance has brands like 'Ladybird' which are worth checking out. http://www.freshinsurance.co.uk/
Approach some brokers and ask if they offer a 6 month policy rather than annual. At the end of this you can can take out a full year policy and you'll have earnt 2 years bonus in just 18 months. Some brokers have access to 'age accelerator' deals - what this means is if you are 19 but only a few months away from 20 they can 'accelerate' you and give you the price a 20 year old would get - considerably cheaper!
Consider taking the 'Pass Plus' course and exam - http://www.passplus.org.uk/ Many insurers will give you a discount for this. A quick calculation will tell you that the cost may well be more than offset by the reduction in your motor insurance premium. The site lists insurers like Norwich Union and brokers such as Adrian Flux who can offer you premium flexibility with the Pass Plus.
Finally, think carefully about the car you buy if you're at that stage! Insurers have started to take a more sophisticated approach and even if you are a young driver buying a more sensible car says something about you and will be reflected in the price. Buy a hot hatch with go-faster-stripes and super-wide-wheels and you'll pay the price on your insurance!
Monday, 20 August 2007
The Rise and Fall of the Insurance Aggregators?
The appeal is obvious - rather than spending tedious hours ringing around to find the cheapest motor insurance quote you simply log into a site, input your details once and the quote engine does all the work for you. But is this really best way to ensure you're getting the right cover at the right price - and the best value for money? 'Value for money' is the key - what you're buying of course is intangible - it's the peace of mind to know that should your car be stolen or you have an accident the insurance will pay. Unless you use the 'screen scraper' or aggregator correctly you may end up with a worthless policy even if it was the cheapest!
One of the UK's leading insurers, Direct Line, has commissioned research which reveals that 93% of people who use comparison sites believe they should carry warnings about their accuracy. Norwich Union, the UK's largest insurer was recently in dispute with 'Money Supermarket' over the types of customer it was picking up through their 'screen scraper' engine. The whole industry is keeping a very close eye on the way these businesses develop and in their own way via the fees they charge insurers and brokers they are ironically squeezing margins to potentially damaging levels.
So, good or bad news for the customer? Personally I think these engines are great for either 'sense checking' your insurance quotes or testing the market but I wouldn't personally buy online. This is not a concern about security - its simply a case of is the cover right for me. To give you an example, the classic is your 'occupation.' Believe me this is a major factor in underwriting motor and home insurance and if you don't enter into the site what it 'expects' you may well end up with the wrong cover. When it comes to a claim, the insurer may be entitled to void your claim on the basis they didn't take on the risk you led them to believe it was. Any 'quirks' like part-time occupations etc can also be major factors and how you input these accurately onto a screen scraper is questionable.
My advice - use these engines as a test and the start of your journey then either go to the best insurer or brokers own quote engine or better still ring them.
There are far better ways to ensure the cheapest quote - keep reading and I'll reveal more.
One of the UK's leading insurers, Direct Line, has commissioned research which reveals that 93% of people who use comparison sites believe they should carry warnings about their accuracy. Norwich Union, the UK's largest insurer was recently in dispute with 'Money Supermarket' over the types of customer it was picking up through their 'screen scraper' engine. The whole industry is keeping a very close eye on the way these businesses develop and in their own way via the fees they charge insurers and brokers they are ironically squeezing margins to potentially damaging levels.
So, good or bad news for the customer? Personally I think these engines are great for either 'sense checking' your insurance quotes or testing the market but I wouldn't personally buy online. This is not a concern about security - its simply a case of is the cover right for me. To give you an example, the classic is your 'occupation.' Believe me this is a major factor in underwriting motor and home insurance and if you don't enter into the site what it 'expects' you may well end up with the wrong cover. When it comes to a claim, the insurer may be entitled to void your claim on the basis they didn't take on the risk you led them to believe it was. Any 'quirks' like part-time occupations etc can also be major factors and how you input these accurately onto a screen scraper is questionable.
My advice - use these engines as a test and the start of your journey then either go to the best insurer or brokers own quote engine or better still ring them.
There are far better ways to ensure the cheapest quote - keep reading and I'll reveal more.
Sunday, 19 August 2007
Insiders Guide to the Insurance Business
Is it really possible to make serious money savings on your insurance bills without compromising quality of cover? If you understand how the industry works and follow my advice, the answer is 'Absolutely!' You need to understand that there isn't actually a fixed cost for insurance products and that if you follow some basic tips to navigate the process anyone can shave hundreds of pounds off their annual bill. In this article I'm going to focus on motor and household insurance but as this site develops I'll cover other products.
Let's begin with some basics. The UK industry works on a 'commission' basis ie when you buy your motor or household insurance the broker or introducer (eg bank, building society) is paid a percentage in commission for the sale. In motor insurance this is typically 10% so of your £300 premium Mr Broker receives £30 in payment from the insurer. I say 'typically' as in reality the commission rates vary depending on the scale of business the broker can introduce and their business relationship with the insurer. This is one area where you as the customer can apply some negotiating power. Let's look at an example.
Broker A is on standard 10% commission with the Insurer A. Broker B, however, has a special deal with Insurer A and in return for placing £5M a year of motor insurance business receives 15%. In practise the brokers can vary the rate they take to help them secure business. In our example, Broker A will receive £30 of your £300 premium but Broker B can potentially take £45. If Broker B really wants your business and you tell him you have a quote for less than £300 he can waive some of his commission to 'fund' a discount ie offer you the quote at £280 and take £25 commission (he's effectively paying away £20 of his £45 potential commission to you as a 'discount'). This is all 'seamless' of course - all you will see as the customer is that you have an identical policy with the same Insurer but that there is a money saving on the premium you pay.
The industry is incredibly competitive - particulalry for motor insurance - and the above example is a basic illustration of how and why premiums vary. When you follow this to more extreme scenarios there are brokers out there who will work on 'nil commission' and you will pay the 'net' price to the insurer - potentially big money savings to you the customer! So how do they make money, I hear you ask. Quite simply they work on the basis that you will renew the policy with them next year and hopefully beyond and that over your 'life cycle' as a customer they will turn in a profit from you. They will also try to 'cross sell' and 'upsell' you to buy other products such as Motor Breakdown, Legal Expenses cover and potentially Home Insurance and other non-related products - all of which carry their own commissions.
Recent years have seen the arrival of quote comparison sites such as 'Confused.' You may know these as 'screen scrapers' but inside the industry they are called 'Aggregators' and are seen by many as a threat to the future of the industry. In my next article I will explain how these actually work and how as a customer you can truly ensure the best product at the best price.
Let's begin with some basics. The UK industry works on a 'commission' basis ie when you buy your motor or household insurance the broker or introducer (eg bank, building society) is paid a percentage in commission for the sale. In motor insurance this is typically 10% so of your £300 premium Mr Broker receives £30 in payment from the insurer. I say 'typically' as in reality the commission rates vary depending on the scale of business the broker can introduce and their business relationship with the insurer. This is one area where you as the customer can apply some negotiating power. Let's look at an example.
Broker A is on standard 10% commission with the Insurer A. Broker B, however, has a special deal with Insurer A and in return for placing £5M a year of motor insurance business receives 15%. In practise the brokers can vary the rate they take to help them secure business. In our example, Broker A will receive £30 of your £300 premium but Broker B can potentially take £45. If Broker B really wants your business and you tell him you have a quote for less than £300 he can waive some of his commission to 'fund' a discount ie offer you the quote at £280 and take £25 commission (he's effectively paying away £20 of his £45 potential commission to you as a 'discount'). This is all 'seamless' of course - all you will see as the customer is that you have an identical policy with the same Insurer but that there is a money saving on the premium you pay.
The industry is incredibly competitive - particulalry for motor insurance - and the above example is a basic illustration of how and why premiums vary. When you follow this to more extreme scenarios there are brokers out there who will work on 'nil commission' and you will pay the 'net' price to the insurer - potentially big money savings to you the customer! So how do they make money, I hear you ask. Quite simply they work on the basis that you will renew the policy with them next year and hopefully beyond and that over your 'life cycle' as a customer they will turn in a profit from you. They will also try to 'cross sell' and 'upsell' you to buy other products such as Motor Breakdown, Legal Expenses cover and potentially Home Insurance and other non-related products - all of which carry their own commissions.
Recent years have seen the arrival of quote comparison sites such as 'Confused.' You may know these as 'screen scrapers' but inside the industry they are called 'Aggregators' and are seen by many as a threat to the future of the industry. In my next article I will explain how these actually work and how as a customer you can truly ensure the best product at the best price.
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