Shop for insurance
Shop around. Two words that are so easily said. Sadly, the reality is often a little less easy.
I speak as a man who just spent the better part of four hours shopping around for car insurance.
I might not have loved the experience but it was time well spent.
The quotes I got were for comprehensive car insurance on a $13,000 Mazda 6 wagon my wife and I were buying. Yes, the price is pretty low but my wife drives a hard bargain.
Buying a car always makes me grumpy.
It is necessary for many of us but it brings so many repeat costs (petrol, registration, oil, insurance, etc) and some financial risks (repairs, reversing into pillars in underground car parks, etc).
I got quotes from AA Insurance (mostly owned by Vero), State, AMI, Lantern (all owned by IAG), Youi and Tower. The quotes ranged from just under $600 to just over $800.
Now, just comparing premiums can be misleading.
IAG and Vero refuse to hand their pricing over to online insurance comparison sites. They say that these sites, which are monsters in places like the United States and United Kingdom, result in people only comparing prices, not price and quality. So I read all the policy documents. I found the differences modest, as indeed you might expect in a market where IAG and Vero account for some 80 per cent market share.
Bemusingly, the pricing of the IAG policies under the State, AMI and Lantern brands were very different. Lantern provided the second highest quote, State the cheapest. And a thing I really didn’t expect were the lack of correlation between the excess I was expected to pay and the premium.
An excess is the amount of a claim that the policyholder has to pay before the insurer has to pay anything.
The standard excesses I was expected to take were $300, $400, $500 and in one case $750. The State excess was $300.
The Youi excess $750. And the State quote was more than $100 cheaper than the Youi quote.
There seems to be little excess logic in the market. AA Insurance had a $400 excess. So did Lantern (owned by IAG subsidiary NZI). Tower had $300 like State. So did AMI.
All had higher excesses in cases where the driver was under 25.
At State, it rose to $1200, which seemed to me to be, well, excessive.
AMI helpfully sent over a breakdown of how much I could save on my quote for taking different excesses.
Nil excess would bring an annual premium of $881. A $300 excess would mean a premium of $680; a policy with a $500 excess would cost $645.
Solely based on the damage I did to the boot of my old car reversing into my car port in 2011, I don’t feel that saving $35 a year is worth risking an excess of $500 but then we all have to make our choices.
The shop-around did something else for me. It reminded me what I was covered for and all the tricky things in car insurance policies that annoy me.
Insurance policies are tricky to read, which is why many people don’t.
Let’s face it, most of us sign up to a policy assuming it covers us in the event of a crash, fire or some swine stealing it.
They do but it is pretty easy to give your insurer a reason to ‘‘avoid’’ your policy (in effect, to refuse a claim and then tear it up).