Shop for in­sur­ance

Auckland City Harbour News - - NEWS -

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).

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