How to get the best insurance deal

My husband wrote the blog below, which offers valuable information regarding insurance and the benefits of shopping around.

Obtaining insurance quotes is a tedious, time consuming process and most people would rather walk on hot coals than shop around for insurance quotes. Nonetheless you can save a significant amount of money by doing so.

A couple of years back I decided to undertake the process on an annual basis, and have also responded to radio advertising in order to try and obtain better premiums. I thought I would share some of my learnings and relate two incidents which resulted in significantly reduced insurance premiums.

1. Insurance does not necessarily have to go up each year. Do not simply accept an annual increase from your insurer – when you are informed of an increase respond telephonically and try and understand the reason for the increase. If you are a low risk client point this out to the insurer. Higher risk clients can expect (sometimes large) annual increases, but low risk clients should demand the opposite.
2. Bare in mind that while costs of goods and services increase each year, blanket inflation linked increases are not always applicable. House prices have remained fairly static for a number of years for example, and electronics have a tendency to decrease in price. Very importantly your vehicle ages each year and so its insured value drops. However, unless you point this out to the insurer, you can expect an annual premium increase.
3. Be proactive and telephone your insurer before they send you your annual premium increase and point out the facts relating to your low risk status, that as a result of the passing of time you are perhaps claim free for more than three years (insurers are only concerned about claims within the past 3 years), that you vehicle value has dropped, etc.
4. Most insurers want to charge an initial joining fee. This may be as much as your monthly premium. This amount, however, tends to be negotiable and may in fact be waived completely.
5. Your excess amount is negotiable, and it affects your monthly premium. However, make sure that if you go for a higher excess, the monthly premium saving warrants it, so that should you claim within a certain number of years, no matter how unlikely you feel this might be, you do not lose out.
6. Your vehicle can be insured at either the retail or market value. Be aware of this, the respective values and the effect on your monthly premium.
7. Find out if there is an additional excess (percentage based) over and above your standard excess in the event of your vehicle being stolen or written off. Most insurers with the exception of Outsurance and Miway have such an excess, although I have discovered that some of the other insurers are also offering “new products” that do not have the additional excess.
8. Most insurers try to sweeten the deal with a variety of extras that they offer. Make sure that you really want such extras and that they warrant you moving to insurance ABC over insurance XYZ who do not offer such extras, but who have a better monthly premium. Always bear in mind your primary reason for being insured.
9. Most insurers offer “loyalty rewards” such as Outsurance’s Outbonus, Miway’s Mirewards etc. I am somewhat fuzzy with regard to these rewards – are they to encourage loyalty or prevent unnecessary claims (although you are always told to mention all incidents in the past x years “whether you claimed or not” when taking out a new policy). I think they are most likely to encourage honesty (although Miway do pay their reward even if you have claimed). Do not be put off claiming if you have a valid claim even if it affects your rewards programme – as in point number 8 always bear in mind your primary reason for being insured. Also consider the long term saving of staying with insurer ABC to qualify for such a reward versus switching to insurer XYZ and saving on your monthly premium.
10. If you take out any new insurance policy, you are allowed to cancel it any time before the inception date with no financial implications. Insurers often pressurise a person to take out a new policy on the spot. If you do so, you are allowed to cancel if another insurer gives you a better deal.
11. Buildings insurance need not be done through the bank with whom you have your home loan or their preferred supplier. They are generally more expensive (often substantially so), so shop around!
12. You do not need to have all your insured eggs in one basket. Car A can be insured at ABC, car B at insurer XYZ, your household contents at insurer HJK, etc. However, you can sometimes get discounted insurance should you have more than one item insured by a single insurer.
13. Perhaps most importanly of all, the premium you are first given is generally not the best premium that is possible from any given insurer. In fact, if you negotiate, even a subsequent quotation may still be more than the lowest premium possible. After obtaining a quotation from ABC, point out to the insurer that XYZ Company has offered a lower rate and state the lower rate. If need be and you have the stomach for it, revert to XYZ and try to obtain a better deal from them, thereafter perhaps even revert back to ABC again. In this case it certainly helps if you are a low risk client.

Case 1

I responded to the Outsurance radio campaign offering a R400 payment if they could not beat my current insurance premium. Knowing that up front that they would want to be told my current monthly premium, I realistically expected that they would offer me a small saving, but that it would not warrant me taking up their offer. As anticipated that is exactly what happened. I then began the negotiation process pointing out my low risk status, etc. and obtained an improved quotation that did in fact warrant me switching. I took out out the policy, which I was partly pressurised into doing because the quote I was given was “only valid now”. I then reverted to my current insurer, Miway and told them that I was considering cancelling my insurance and switching to Outsurance because of an reduced monthly premium that was very appealing. The Miway consultant “spoke to his manager” and offered me an even better premium, and so I decided to stick with them. I then immediately telephoned Outsurance again and cancelled the new policy I had just taken-out with them.

Case 2

I received a letter from Dial Direct who are responsible for my buildings insurance, stating (not directly) that my monthly premium would increase by 22% from the 1st of March 2013 and that this was a “market-related” increase. This also despite me being claim free for the past year – in fact I have never once claimed on my buildings insurance. Before even contacting Dial Direct I started phoning around to obtain improved quotes. I started by contacting the Telesure Group (under which Dial Direct fall). I was told by the consultant I spoke to that First for Women would give me the best premium on building cover, this despite the fact that I am not of that fair gender. She gave me a quote which was less than my original Dial Direct premium, let alone my new premium, and I said I would first speak to a Dial Direct consultant before taking up her offer. Not mentioning the offer I had from First for Women, I spoke to a consultant in the Dial Direct retentions department who reduced my monthly premium and gave me an offer that was about 3% more than my current Dial Direct premium (before their 22% increase). I accepted this. The First for Women consultant then telephoned me and I decided to take up her offer which was 10% less than the improved premium that Dial Direct had just offered me. It was also sweetened by the fact that the initial joining fee would be waived completely (originally I was told I would be charged 50% of my monthly premium, but that their normal joining fee is 100% of the monthly premium). I telephoned Dial Direct to cancel my insurance and they came in even lower – 20% less than their “improved offer” (i.e. following the 3% increase) and a whopping 32% less than the new amount they originally were going to charge me from the 1st of March! I quite obviously decided not to cancel my Dial Direct policy and instead telephoned First for Women again and cancelled the new policy I had just taken out with them. I asked why Dial Direct had had increased my monthly premium so substantially, and why they could drop it twice thereafter when I negotiated, and I could not obtain an acceptable answer, the best being that “we do not want to lose your business”.