I hate buying insurance, but comparing has just saved me £150 on my home policy and £100 on our car cover.
Think switching energy is too complicated? Confused by different broadband deals? Get over it. They’re child’s play. At least compared to the horror that is buying new insurance policies.
I normally enjoy finding new deals for things like mobile phones and TV (I know, weird…). But I loathe comparing and buying insurance. Really loathe it.
However, it’s a pain worth enduring. Taking your time and doing it properly can save you hundreds of pounds AND ensure you have the cover you need. Which is really important.
Why it’s important to get the right insurance cover
I imagine a fair few of you haven’t ever read your policy documents for ANY insurance you’ve bought – that’s until you need to claim. Hopefully you were covered. But so often there’s something in the small print which means you’re not entitled to what you expected and you lose out.
Why you need to shop around
Hey, I’ve said it before and I’ll say it again. Never auto-renew. It’s not just energy and telecoms contracts that screw you if you don’t shop around – insurance is a killer. The best prices are normally for new customers, and shoot up in year two. But look around and you WILL be able to get some kind of discount, even if it’s just leverage to get your current insurer to lower their quote.
At the bottom of the article I’ve listed a few tips to help you save some money on various types of insurance, but first I wanted to share why I hate buying insurance so much.
Why I hate doing it so much
I’ve just bought new buildings and content insurance, and a few weeks back Becky got new insurance for our car. Now, they only took us a couple of hours in total, and we saved £250 by doing it. £125 an hour – a really good rate for 60 minutes work.
It’s just a shame it’s so very painful! Here’s what really pissed me off this year (as it does every February).
So much junk mail
Each year dozens of letters and emails arrive with quotes for both – they’ve all got our details and renewal date on record from previous years. Only Virgin Media waste more paper! And it is a waste as I ignore them all.
Sky high auto-renewal costs
Both our car and home insurance providers sent us the price for the next 12 months. Since it’s been a year, I couldn’t remember how much I paid last year. So I checked.
The difference was £144! Nothing has changed in that time. And it’s the same every year with every insurance. A big jump in price and the hope you won’t question it.
Having to call up to cancel
If I’d wanted to stick with my current insurance I didn’t need to do anything, though if I wanted I could confirm the renewal online. However to cancel I had to call up. Ok, it only took five minutes, but surely I should have had the option to click once online and move on!
Too.. much… information
The biggest issue I have with insurance is the amount of information you need to know.
When was my house built? What type of lock? How much would it cost to replace everything? Do I want this extra? Do you have anything valued over £1,500? How much excess do I want to pay? And the list goes on.
Overly simple comparison sites
Insurance is a great example where the cheapest is probably a BAD CHOICE. The lowest cost is unlikely to provide the cover you need, so you need to explore each of them in more detail – and I don’t think the comparison sites help.
They’re trying to make it easier for you, but I think they simplify results too much. At best they’re a guide to what you could pay. But once you click through I find the prices inch higher and higher as you bespoke the quote to you and your needs.
Plus Direct Line and Aviva aren’t even listed so you have to search AGAIN on their websites to see if there’s a better deal
Impenetrable language
Finally, from insurer to insurer, everything is a little different. Value limits vary, excess levels move, some things are included, some are excluded. And they only way to know what you’re paying for is to read the policy documents. And they are BORING.
If I’m honest I don’t read all of it in detail. I don’t think I could. But I always take a look to check there’s nothing glaringly absent, or things such as if replacements are “new for new” or subject to wear and tear.
Yet, it would help so much if they could simplify these documents. Yes, there’s often a policy summary, but that’s usually just a list of the cover limits, so you still need to read on for exclusions and so on.
Sigh.
A few tricks to bring down the cost of insurance
But as I said, it’s worth getting through all this to get a decent deal for the cover you need. And you can save money. Here are a few ways to do it.
All insurance
- Always see if you can get a better deal by saying you’re thinking of leaving.
- This is one of the exceptions to the rule that direct debits save you cash. Paying monthly for insurance is actually a loan, and you’re charged extra. Try to pay it in one lump sum upfront.
- Once you’ve got a quote, save it, close the browser and go back via Quidco or Topcashback.
- You can increase your excess – though you will have to pay that if you claim.
Car insurance
- Try different job titles to see if they make a difference to how much you’re charged. They still need to be accurate, but the price can be different for very similar job titles.
- Add a family member to your policy, it could lower the premium.
- See if you’ve already got breakdown cover from your bank or when you bought your car.
Home insurance
- Don’t over-insure. When you add up the value of everything you have at home, try to be as accurate as possible.
- But don’t be tempted to cut your premium by under-insuring. You’ll loose out if you need to claim.
- Make your home more secure. Adding burglar alarms, joining the neighbourhood watch and fitting smoke alarms can bring the price down.
I had more trouble with home insurance this year than ever before. My insurer – Axa, via Swinton – wanted over double last year’s premium, I assumed because of a claim last year. Instead I took up Halifax Bank’s offer, with £25 cashback but their website only allowed me to describe the claim of £374 as buildings OR contents. I phoned and corrected it to both B.&C. so they wanted an extra £29 premium, just for the description change! No change in the cost of the claim. I cancelled. The I tried a broker called Arkwright for a similar net (of cashback) price but raised queries about their £40 new policy fee and £75 fee for cancellating during the 14 days period – I assumed this meant the cooling-off period on Internet purchases – plus other queries. Yes I read the T.&Cs. No reply after 7 days. It was only when I told them I didn’t want to discuss it on the phone and would complain to the Financial Ombudsman that they agreed to refund me. I read somewhere that it costs a firm around £555 if you complain to an Ombudsman which is an effective incentive to settle your complaint before the Ombudsman considers it. I finally took it out with computerquoteinsurance.com for a simliar net price after cashback. Despite this incentive and while there are the Unfair Terms in Consumer Contract Regulations which enable unfair terms to be challenged, as Andy says, its better to read the T&Cs, than to face the aggravation.
I have always felt that one unfair term in home insurance is actuarial reduction i.e. if you insure for £50,000 and claim for £15,000 but the insurer decides you should have insured for £100,000, they only have to pay you half your claim on the basis you under-insured. My view is you paid the premium for £50,000 cover and should be paid for any claim up to that amount. Sheer authorised robbery!
Totes the most boring job ever…and I never know if I really got a good deal. Thankfully home insurance sorted on Monday.
Car insurance to sort before 23rd March. Renewal was £120 higher than last yr.
Nice in depth post Andy
Have you ever had a go at self-insuring anything?