Posted by Jill Kerby on March 31 2015 @ 09:00
NEED CHEAPER MOTOR INSURANCE? SHOP AROUND FOR A NEW QUOTE OR A NEW BROKER
A friend of mine, a very spry widow of 74 who recently returned to Ireland after many years living in New Zealand, is having a problem getting a new motor insurance quote for her brand new Volkswagon. A minor claim a few months before leaving NZ (and another one a couple of years earlier) has resulted in her being refused cover here.
She explained to me that in New Zealand where she had insured her no-claims bonus against relatively small claims she thought nothing about reporting the accidents to her insurance company, knowing it wouldn’t have a huge impact on her next renewal quote. “Had I known it would result in me not getting motor insurance once back in Ireland I would have paid the cost of these repairs myself.”
She now has to wait for at least three insurers to refuse her a quotation before she can appeal to Insurance Ireland to find her an accommodating insurer. Meanwhile, she’s dreading how much the premiums will be.
Exceptional cases like this one show just how complicated insuring your car can sometimes be…and how expensive.
Unfortunately, the option of shopping around for my friend – even for third party, fire and theft cover - no longer exists and the recent Motor Insurance Comparison Survey from the Competition and Consumer Protection Commission which has shown quite a disparity of premium quotations between insurers will only be of theoretical use to her by driving home (no pun intended) just how much more she will be paying for her cover.
The survey once again reveals that importance of shopping around for motor insurance. The potential savings, said the Commission “vary depending on the level of cover required and the individual’s circumstances, but for comprehensive cover the difference in quotes received was found to be between €156 and €1,249. For third party fire and theft the difference in quotes ranged from €137 to €975.”
At the high end, these are huge savings, not unlike the kind available by shopping around at every renewal date for private health insurance.
This survey compares motor insurance quotes from eight insurance providers based on nine different driver profiles – which vary in age, location, driver experience and factors like how many penalty points you have. Your gender – being a woman - no longer makes any difference (since the EU Gender Directive of December 2012) in achieving a lower quotation.
So how much would a 67 year old, Dublin owner of a 2 year old Ford Fiesta (with two penalty points) would save €170 by shopping around. At the other end of the spectrum of car values, a 38 year old dentist, driving a €40,000 Lexus in Co Meath would save €484 on her comprehensive insurance by seeking out for the lowest quotation. And a 25 year old teacher from Kilkenny with a six year old Nissan Micra could save €514 by shopping around for the lowest third party, fire and theft quotation on the market, albeit with a €300 excess per claim.
(You can find all the profiles here: http://www.consumerhelp.ie/index.jsp?p=106&n=470&a=1124)
As this survey shows, it isn’t just that some motor insurance underwriters calculate risk differently and this is then reflected in their quotations: it is that some clearly are not very interested in covering younger drivers, or drivers with penalty points, or those who like my friend are not accident free for a number of years.
Insurance brokers tell me that, depending on their pattern of claims, insurers will hike the price of cover for certain cars (boy racers beware!), geographical areas and of course how willing the driver is to take on a higher co-payment – the dreaded “excess”. The higher the excess, the lower the premium and this applies for nearly all types of insurance, including house and health insurance.
Meanwhile, engine size, a petrol or diesel car, how long you’ve been driving (let alone your age) and whether the car is securely parked indoors at night or left out on the road can ultimately influence how much you will pay for insurance. Even your city neighbourhood can influence the price of your car’s insurance. Paying in instalments can add up to a whopping 20% to the cost.
Over the years I’ve found it doesn’t take too many other quotes to convince my long-standing insurance company to match the best quote I’ve collected for the same level of cover.
But if you don’t even want to go to that much trouble, call a good, reliable motor insurance broker and let them do the work for you. If they don’t get you a reasonable premium every year, then you can always shop around a new broker.
If you have a personal finance question for Jill, please email her at firstname.lastname@example.org or write to her c/o this paper.