A stolen smartphone isn’t the end of your world, but could you say the same when it comes to your car?
“Damn insurance company. Should have known they’d come up with some reason not to pay. I knew that it was too good to be true!”
A week earlier Gerald had bought his first car ever. He got the call late Thursday afternoon letting him know his finance had been approved. Friday morning he was there to pick up his new vehicle.
As he signed the paperwork the finance person asked: “Can you give us proof of insurance, please?”
Gerald replied: “I don’t have insurance.”
“But you need insurance. We can’t let the vehicle go unless you have insurance. Can I arrange this for you?”
“Sure, thank you. That would be great.”
At this point Gerald was the happiest man on earth, but it wasn’t for long…
“Honey, can I borrow the car?”
“We need a few groceries.”
“Okay, cool, but remember I need to leave by 12.”
Twenty minutes later Gerald gets a call…
“Gerald, I’ve just had an accident. Can you come and help?”
“Ag no, what happened?”
“Some idiot went through a red robot and hit me. It wasn’t my fault”
“How is the car?”
“It looks bad Gerald.”
“Are you at least okay?”
“Yes I’m fine.”
“Hang tight, I’m on my way. As long as you’re fine.”
Unfortunately for Gerald, things are far from fine.
He calls his insurance company:
“Yes hi, my name is Gerald and I’d like to register a claim.”
“Yes sir, by all means. Tell me, were you driving when this happened?”
“I wasn’t driving – my girlfriend was.”
“Sir, you do realise you’re insured as nominated driver don’t you?”
Gerald is about to discover the first mistake on our list.
Mistake Number 1 – Nominated Driver
One of the biggest risks facing an insurer is the driver. Think about it…a granny who drives once a month is a much lower risk than your 18 year old son trying to impress the girls.
Insurance companies base their risk premium on the person who is the most regular driver of the vehicle. This doesn’t mean no-one else can drive the vehicle but it does give them an idea of who most often drives the vehicle, and how much to charge for the risk they’re about to accept.
When you nominate one person as the only driver of the vehicle…well it simply means that the risk to them is way less than if multiple people drive. This means they can substantially discount your cost.
The problem comes in when someone else drives the car. If anyone else is behind the wheel, then there is no claim in the event of an accident or theft.
Here’s an example:
- So you’ve had a few toots too many at the pub.
- Your best friend drives you home.
- There’s an accident.
- You literally have no leg to stand on regarding a claim
Mistake number 2 – Missing Your Monthly Debit Order
Yip, times are tough and it’s a juggle robbing Peter to pay Paul. But if you’re skipping your monthly insurance premium, watch out!
Think about it…when you’re in a pickle it’s tempting to make an insurance claim. Skipping your debit order is a sure sign of cash flow problems. Claiming might raise a few red flags with your insurer.
So how does this affect you?
- When it comes to your policy renewal date, you might have a higher than expected increase
- When hunting for more affordable insurance you might find them offering you higher than expected rates
Mistake number 3 – Not taking your vehicle for an inspection
- just bought a second hand car or
- you’re moving from one insurance company to another.
The new insurer asks you to take your car for an inspection at your nearest Glasfit.
What can I say…things get busy, and you forget to have it done. Next thing you have a claim and it gets rejected. Why? Because you never took your car for the inspection
Why do they ask for an inspection?
To check whether your car:
- Is roadworthy
- Has any pre-existing damage. Pre-existing damage must be claimed from your previous insurer.
- Whether your car has an approved alarm/immobiliser system fitted.
Mistake number 4 – Wrong overnight address
You’ve had your insurance for years. You’ve also just moved. You’ve also forgotten to update your car insurance details, and your car’s just been stolen out of your new driveway.
Now you’ve got a problem since you’re insured for the wrong risk address. Previously you stayed in a secure complex with your car kept in a locked garage overnight. Now you stay in a flat with your car out on the street. What do you think might happen to this claim?
Mistake number 5 – Telling them you have a tracking device fitted
A tracking device is a great thing to have especially if you have a family:
- Imagine being hi-jacked and seeing them disappear into the distance with your baby still strapped in?
But noting the existence of a tracking system with your insurance company might not be wise. Why?
Because it becomes a requirement for your insurance cover. In other words, if it’s not in a working condition your theft or hijacking claim could be rejected. And whose responsibility is it to make sure it’s working? Yours!
And for the record…when last did you check that it was working?
Granted, in certain cases it’s a requirement that you must have a tracking system fitted, but think carefully if it’s not required.
Always look at the vehicle you’re trying to insure from the eyes of the insurer. Ask yourself: “If I was going to insure myself, what would I be on the lookout for?”
I’m also guessing that checking your insurance schedule isn’t something you regularly do. One of the best ways to get a brand new perspective on this is to have a brand new quotation done. You will also find out whether you’re paying too much for insurance.
The new quote will be based on your current credit record and claims history. Once you have this in hand compare it to your current schedule just to spot any errors. At this point you have two options:
- Correct any errors on your existing schedule or
- Switch to a brand new insurer (but always taking your cash back benefit into account before doing so)
So what you waiting for?
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Until next time.
The InsuranceFundi Team