One of our clients recently asked me to get him alternative car and home insurance quotations… which got me thinking about whether cheap insurance is really better in the long run!
Here’s what happened…
Their current broker had – a couple of months ago – moved him from one insurance company to another.
While with the new insurer, his business partner had a vehicle claim, and was now waiting over a month for his vehicle to be delivered. The reason given by the panel beater was that they were waiting for second-hand parts as per the insurance company’s instructions.
The client was rather miffed, and rightly so, which led him into contacting us for alternative quotations.
Now interestingly enough, I was able to get him cover with his previous insurance company at a much lower rate than what he is currently paying. How’s that for ironic?
But here’s the interesting bit?
The panel beater doing the repairs had told him that his previous insurance company (The insurance company I quoted on) was one of the few that never insisted on having second-hand parts fitted!
So here’s my question to you.
Are cheap premiums so important to you that you’re willing to trade off the quality of repairs done to your vehicle…?
Which is fine if you’re driving a ten year old gem but maybe not so okay with your 201o baby?
Common sense tells me that for one insurance company to offer cheaper premiums than another; either one of three conditions need to be met:
- Either their claims experience is way better than the more expensive companies… Which is doubtful since if they are offering the cheapest premiums, then it stands to reason that they are trying to attract bargain hunters – and therefore more risk – than the more expensive insurance companies (Much the same as banks who, when short of cash, offer better interest rates than their competitors) ?
- They are getting their vehicles repaired much cheaper than the more expensive insurance companies. This means that either they’re getting better rates at their preferred panelbeaters or they’re using cheaper replacement parts?
- They’re dangling a carrot in front of you to get you on books and plan on hiking your premium soon (Believe me it happens!)?
Now I can’t prove any of the above, but it’s certainly food for thought, isn’t it?
And just one of many factors to consider when taking out car and home insurance – the reputation of the insurance company concerned!
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Until next time.
The InsuranceFundi Team