One thing that is on my to do list every year, when my insurance contracts are about to expire, is to go look for a better deal, or make sure my current company provides the minimum coverage I need at the best price possible. Your insurance premium is a bundle of individual prices for each service you require, so why pay for extra options you won’t use?
Like airlines, when you browse for car insurance, there are a lot of comparison sites that allow you to find out in just a few clicks which company has the best deal for your circumstances. I always thought that since companies give discounted bulk prices to those intermediaries, the latter then can offer lower prices than the official rack rate of the company. Say if the insurance company discounts 20% to its affiliate sellers, they can keep 15% and pass on the other 5% to their consumers. So I was surprised to read about that survey from Insurance Revolution, stating that 55% of consumers believe going direct will get them the best motor insurance deal. Actually I even had a similar thing happening with a hotel lately. I saw it on a site where I also have my guest house, so I know they charge 15% commission, and since I was in town, I went straight to the hotel, and was offered the same rate. I asked for a discount, arguing I was saving them 15%, and they said no! I did book directly still, so they could earn a bit more but found it strange. So anyway, for insurance, I generally go to a few comparison sites, trying to find the one that is the most generous in passing the savings on to the customer.
However, going back to my point of not paying extra for options you won’t use, maybe the affiliate sellers only have access to set packages, and calling the insurance company directly, if you have a very specific situation, may result in extra savings.
The survey shows that only 15% of interviewed people consider they have a poor knowledge regarding the impact of different factors such as occupation or vehicle choice affects their insurance policy. Almost 70% trust their insurance provider, which is a good thing, but may be against your best financial interest. If you are happy with your provider, it is easy to get comfortable and stop challenging the premiums every now and then. Switching every year like I do only takes 10 minutes and usually saves me at least £50 compared to the renewal premium the company asks for. They tend to have a very attractive rate in the first year to get you through the door, then raise their rates quite a bit the second year. I am sure for many households, the convenience of not having to switch is worth more than £50, but if you are on a tight budget, motor insurance policies are worth challenging. Apparently, once again, I am not an average consumer, as only 9% rated the policy cost as the most important factor when they choose a policy, in favour of high street vouchers and cashback. Unless those were vouchers for a place I shop at regularly, like the supermarket, and I could treat those as cash, I would always prefer a discount over vouchers you may forget and leave to expire in a drawer.
Anyway, if you haven’t checked your policy in a while, I would recommend you do so, and since online comparison websites only take a few minutes to check, I’d suggest you do both and go with the best policy for your needs and your wallet.
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