Should You Go Direct?

We got the call a little over a week ago…

A couple was referred to us by one of our clients. Apparently lightning had struck their home and fried their alarm system. Doing the right thing, they duly notified the insurer who informed them that they – the insurer – would send out their authorised agent as soon as possible to repair the alarm system.

Now knowing that we don’t live in the safest of countries, the couple were slightly miffed at the insurer’s refusal to have the local alarm company (who installed the alarm) come in and repair it. After all, what if their house was broken into during the night?

What you need to know is that this is the type of client we love…always paid their premiums on time, and had been with their current insurer for ten years with this being their first ever claim!

All it took was lousy treatment for them to go shopping.

But I had a problem…

The couple had been with the same insurer for ten years – never claimed – which meant low, low premiums. Ten years ago the risks were a lot less; insurance rates were also a lot less back then. So when it came time for the annual rise in premiums, the insurer had little option but to increase with the inflation rate.

The bottom line was that I couldn’t do better amongst my current crop of insurers.

Which brings us to the question of should you be going direct when shopping for motor and household insurance…
You see, if there’s one thing we love about this business – it’s helping people who really appreciate the value we add.
I’ll gladly spend hours helping someone find a solution to their insurance problem.
Unfortunately I’ve also found that there are quite a few people out there with ulterior motives and hidden agendas.

Which reminds me of an ex-client for whom we ‘did the right thing’ and charged a flat fee of R5, 000 (instead of the R10, 000  which I often charge today. 1% of the lump sum) – payable in twelve equal instalments – for investing his R1 million. The agreement was that if we didn’t perform he could cancel any further payments to us. So every month I’ d pop in at his office, duly provide feedback, and re-balance his portfolio. He ended up making a cool R500, 000 return on his investment within that same year. The following year he simply ignored our request to renew the agreement. Three years later he had the gall to phone me up and ask if I would assist him in withdrawing his investment.

Anyways, getting back to our story…

I started to study their insurance contract and lo and behold – did I discover problems!

• On the first vehicle it was noted that the vehicle had no anti-theft devices. Three blocks below it clearly stated that theft cover was dependent on the factory fitted anti-theft device being in working order at all times.
• On the second vehicle under anti-theft devices it mentioned that the vehicle had a gearlock and immobiliser, but now it had a different set of conditions…theft and hijack cover was conditional upon the installation of an anti-hijack device. This device – and the anti-theft device – must always be in working order. Now, with tears in my baby blues, how on earth would an anti-hijack device be of any help if your vehicle was stolen out of a car park?

What we had here, was a couple who have been paying their insurance premiums faithfully for ten years, without ever really understanding the conditions of their cover.

What if said vehicle had indeed been stolen from a car park, and all the vehicle had in the way of security, was an anti-theft device?

Hopefully it all turns out well for them as I advised them to immediately contact their insurer and clarify the conditions of cover.

So, should you be going direct?

Well, it depends. If all you’re insuring is a vehicle then yes…if you’ve got a lot more to lose then maybe no.

Remember that no-one from the direct insurer will be phoning you up once a year in order to revise your schedule (And I can understand why – some of our own clients don’t respond to our requests for annual reviews either!).

Why not ask yourself…

• How certain are you that your insurance cover is bullet-proof? When last did you haul your contract out and actually study it?
• Are you still parking your car in the same locked garage every night (as you stated to the insurer when you took out your insurance three/five/ten years ago)?
• Do you switch on your burglar alarm every time you leave your home unattended?
• Is your day time parking address still the same as that recorded on your insurance schedule?

If you’re the self disciplined type who monitors their insurance schedules like a hawk (Funnily enough, these are the exactly the people who use a broker!) then by all means – go direct!

If, however, you’re the type of person who’d rather ‘go with the flow’ – who prefers to be reminded about changes that need to be made – then a broker is the route to go.

Two things I’d like to leave you with:

1. Imagine paying R60, 000 in insurance premiums over ten years (that’s only R500 per month!) and then having a R10, 000 claim turned down because of an error on your contract? If you’re not going to review your schedule every time a change occurs then who will?
2. Imagine being held on murder charges – would you choose to defend yourself? Going direct is exactly the same…which isn’t too bad if you’re in court for a minor traffic infringement but spells disaster if you’re up for murder!

Till next we chat

Take care

Lawrence

By the way, if you’re someone like the couple I talked about earlier, who:

• faithfully pays their premiums year after year
• Only claims when absolutely necessary
• Isn’t looking to insure a vehicle only
• Has taken years to build up valuable assets and who understands that they need to be comprehensively –as well as correctly – insured
• Doesn’t hop from one insurer to the next in search of ‘cheaper’ premiums
• Has no ‘trusted advisor’ when it come to their insurance

Then why not contact us? If you fit the bill then – over and beyond offering you competitive insurance premiums with reputable insurers – we’ll assist in making your contents cover as bullet-proof as humanly possible, all at our own cost. Find out more by sending an email to us.

Related posts:

1. How On Earth Do Insurance Companies Make Money?
2. Are You Making This Mistake When It Comes To Contents Insurance?
3. Protect yourself against your biggest risk!
4. Needing Life Insurance For Your Bond? Consider Stepped Premiums
5. Short & long term insurance. What’s the difference?

Tagged as: motor and household insurance, Short Term Insurance