Three Weeks to save a Few Hundred Quid!

Last week a number of newspapers carried the results of a survey which showed that shopping around for your car insurance three weeks before renewal can save nearly £300 compared to leaving it to the very last minute. I have not tried the experiment myself, but am more than happy to believe it. But what does it actually say about the car insurance marketplace? It’s not great in my opinion.

A couple of years ago, one of the online comparison sites wrote a piece suggesting that just over a third of customers didn’t shop around and “auto renewed”. They also suggested that by not shopping around, customers were collectively paying £1.3 billion more than they needed to. That’s rather a lot. It is also a reason why those of you savvy enough to shop around can get a much better deal. Why? Because, insurance companies factor in this amount to their budgeting plans.

Lets be quite cold about this. An insurance company is a business, its first priority is to deliver profit to its shareholders or owners. To do this it must work in an efficient manner, a significant part of that efficiency is predicting cashflow over the coming years. If they know that a third of their customers will renew without much of a haggle, then they can use this money to sweeten deals for new customers and those threatening to move elsewhere. It kind of takes away the image of highly qualified underwriters working out prices using complex formulas that include age, vehicle, usage etc.

Don’t get me wrong, such underwriters still exist, and revel in their complex formulas, it’s just that the marketing folk are considered more important and will nearly always trump realistic underwriting figures in order to get a sale, or keep a customer.

*warning! A “it wasn’t like it back in my day alert”*

When I first started dealing with car insurance, my company gave me a Rate Book. There was no computers, everything was done manually using figures in the book, which was updated three or four times a year. When I gave a quote, that was it. If the customer had got a cheaper one elsewhere, that was my bad luck. I had lost them, and if I was feeling organised, I would make a note in the diary to have a go again next year. Now I really wouldn’t want to go back to those days. However, I do have a little nostalgia for that period when the premium quoted had a bit of a connection with the actual risk being insured.

Today, I have no doubt that the first figure given is the one most likely to reflect the actual cost to the company of the risk, plus a bit for the shareholders annual golf dinner.  The second and subsequent figures reflect how much can be quoted until the customer says OK. I may be a bit cynical here, but in my world a cynic is just an experienced realist. It has been a few years since I did any quotes myself, but not that long ago, and I still remember insurance companies giving me discretion to discount up to say 20%, but to start a 5% and stop when the customer says yes.

Only last year, I was chatting to a person who worked as a customer adviser in one of the last of the high street brokers. They told me that they had authority at that time to knock off £70 immediately they felt they may be losing the customer. if that didn’t work, then the manager could throw in another £70. After that they could still get on the phone and try and chip away further. “What if the premium starts off at £250” I asked. They laughed and said it would end up at £110!  Great for the customer. Absolutely nuts for running a business. While I still think you have to be a bit barmy to use a high street broker who doesn’t give you actual proper and independently qualified advice, I can honestly see the attraction of taking daft premiums if they are being offered.

If we are being honest with ourselves, we are all a bit lazy. It’s part of being human. And it’s what companies rely on to, putting it bluntly, overcharge. When you take out a car insurance now, it is almost certainly one whereby you have agreed to continue with the insurance automatically at renewal. The selling point of this is that you should never find yourself without insurance, which is actually a very good thing. the bit that isn’t shouted from the insurance company rooftop is that the premium you will be paying is going to be part of the £1.3 billion slush fund that will be used to subsidise your friends, neighbours and colleagues who have been a bit more proactive than you have.

 

Gap Year Insurance

Why Insuring for a Gap Year is a little different…

Visiting far away places on a shoestring is a popular way to fill a year before going to uni, but it also can include shorter trips of just a few weeks and is not just for the young. Many older people take gap years before starting their careers as well as mid career. The trip itself can be structured with every destination planned or an ad hoc journey with no real idea of the next place to go until the last minute. Working or volunteering may be a part of the plans.

All these factors have an impact in the type of travel insurance that is taken. If volunteering is not mentioned when taking out cover and teaching in Botswana for a few weeks is the reason for the trip, the the insurance company can void the whole policy.

What you MUST tell the insurer!

  • WHERE YOU ARE GOING

This is not as obvious as it first looks. While a lot of gap year trips are planned and have an itinerary, many do not. It may be that backpacking around Cambodia lost its magic earlier than expected and an impulse excursion to Thailand suddenly happens. Fortunately, for insurance purposes, the world is divided into regions. Typically this works out as UK, Europe and worldwide (including and excluding North America). When telling the insurer where you are going, you must be as precise as possible, but if you are not sure of the exact countries you must make sure you get the region correct.

  • HOW LONG ARE YOU GOING FOR

You will probably have a fixed time planned, but it is always worthwhile adding a few days for insurance purposes. This then takes into account any last minute changes of plans or unexpected delays. Trying to extend cover once it has run out is extremely difficult. Almost all insurers will only commence cover before your trip. Once you are out of the UK, setting up travel insurance is nigh on impossible.

  • WHAT ARE YOU GOING TO DO ON THE TRIP

Working, volunteering, extreme (and not so extreme) sports are all examples of things that you must tell your insurer. Not telling them can, and probably will, invalidate the whole policy. On a darker note, be aware that like any insurance policy, cover will be withdrawn for any insured event if you can be shown to be under the influence of alcohol, non prescribed drugs or have broken any of the local laws.

  • ANY MEDICAL PROBLEMS

    In addition to fully disclosing any existing medical issues, you must have any recommended jabs for the country or region you are visiting. If you don’t, you run the risk of the insurer not paying out if you contract a disease you could have been inoculated against. Always talk to you GP about injections well before your trip.

In a previous post, I did a “Top Ten Tips” These are worth a visit, but here are a few more practical tips for gap years:

  1. Talk to a broker or insurer that specialises in this type of cover.
  2. Read all the small print. Pay particular attention to the exclusions, excesses, medical cover limits and property cover limits.
  3. Check if cameras and phones etc.. are already covered worldwide by your existing home insurance.
  4. Write down (and leave behind!) the serial numbers of all gadgets. Back up any information on them before you leave.
  5. Give the insurer authority to speak with someone other than you. If you are unable to talk to them for any reason, it makes life so much easier.
  6. Photograph the insurance documents so they can be easily accessed on your phone. It’s a good idea to take a small, cheap phone as a spare. in case yours is lost, damaged or stolen.
  7. Leave a copy of the insurance documents at home with someone.
  8. Write down your most important contact numbers.

 

Are you insured against Father Christmas?

For insurance purposes, Santa is no different to any other intruder…

By any definition, Father Christmas is an intruder. Possibly one with a large, semi domesticated mammal as an accomplice. So what happens if your property is damaged during his visit? Or Rudolph is injured while navigating your hallway?

Your home insurance policy cover is relevant for both these events. Firstly though, it needs to be established whether or not Santa has actually been invited as a welcome guest or, like a benign burglar, he has just taken advantage of poor security. The answer may lay in the tradition of leaving food for both Santa and Rudolph, typically a carrot and a mince pie. It can be argued that by leaving these items you are tacitly inviting him into your home. A “Santa Please stop here” sign is definitely an invitation!

As an invited guest, there is no cover against him taking anything from you. This is not likely to be an issue given that his purpose is the complete opposite. However, what if he knocks your iphone off its charger and it breaks? Or Rudolph is particularly taken with your Waitrose Essential carrot and causes a particularly fine piece of majolica to topple over? The good news is that such events will almost certainly be covered under the “Accidental Damage” section of your policy.

But what if he is not a welcome guest? The only alternative can be that he is a trespasser, and as such the damage described above could be construed as criminal damage. For a claim to be successful there should be forceful entry and this is where you may find yourself in difficulty. The insurance company may well take the line that Santa’s modus operandi is common knowledge and question you as to what precautions you took with regard to blocking the chimney. It is unlikely that they will accept not having a chimney as an adequate answer. You could then possibly go down the route of suggesting that magic was used in the incident. From an insurance adjusters point of view, magic is rarely used in their reports as a cause, though I don’t want to put you off completely if you are convinced.

christmas-2

If you do make a claim, believing your loss to be a result of criminal damage, then the insurance company will insist that you notify the police. It will be down to them to decide how to investigate the incident. It is unlikely that you will be able to satisfy them as to forced entry, but it may be worth reflecting a little before presenting the possibility of magic being involved. The courts are no stranger to trials involving magic, however it has been over 300 years since they were common, so finding suitable legal argument may be difficult.

On balance, your claim is more likely to be dealt sympathetically if you do not accuse Santa of breaking and entering.

There is a section on your policy called “Property Owners Liability”. This section protects you from claims following injury or damage from third parties who are on your property and have suffered due to your negligence. The good news is that the cover is in place regardless of whether the third party is there by invitation or not. In short, it does not matter whether Father Christmas was there as a guest or a trespasser, if he or Rudolph injure themselves in your house due to your neglect, they can (and should) claim against you.

In such circumstances, you should take as much detail as possible about the incident, contact details and photographs are ideal. Santa is almost certainly self employed and should be carrying his own liability insurance details, which you should take. You should notify your insurer straight away and, after giving a statement yourself, it will be down to them to handle the claim. If an injury is involved, they may ask for medical (or vets) reports before offering a settlement.

It is not possible to cover all the possible insurance implications surrounding Santa’s visit, but this brief guidance should be enough to reassure you. If you have any questions about any of the above, just have a word with your broker or insurance company – I’m sure they will be delighted to help!

Merry Christmas

 

Insurance is not a Maintenance Contract!

The Great British Weather!

Unsurprisingly, Autumn and Winter bring with them the most number of claims for storm damage. From a few tiles coming off in a period of high winds, to a full on disaster like a roof being completely blown off in a near hurricane, your insurance policy sits in the background. It’s your safety net against such misfortune. However…

…Your insurance policy is a two way agreement.

When you took out your policy, there was a question that you almost certainly ticked “yes” to, without giving it a second thought, it was worded something like this: “Is your property in a good state of repair?”  I’ve always thought this to be a rather subjective question, one man’s “good state” is another man’s “right state”, but it becomes a little more serious when it comes to a claim.

The most common claims involving weather damage are roof related and/or water leaks, known in the insurance world as “water ingress”

With regard to the roof, the usual claim involves loss of tiles. This in itself is a fairly straightforward situation, or is it? There’s a period of high winds and rain that batters the roof over several hours, and when it is all over you find half a dozen tiles in the garden and obvious gaps in the roof. The first thing you do is find a roofer and get them around to give you an estimate of the cost of repair. In the meantime you call your insurance company to tell them and, in all likelihood, they arrange to send someone to look at the damage.

In the old days this used to be a qualified Loss Adjuster whose job it was to assess the claim and report back to the insurance company. He was trained and qualified in his field. Nowadays, Loss Adjuster’s are still frequently used, however, in recent years there has been the introduction of firms other than Loss Adjusters being contracted to do this type of work. If your insurance company is sending someone around to assess damage to your property, it is a good idea to find out just who they are and what qualifies them to make such assessments.

Back to the missing tiles…

There are in fact different ways of looking at a claim of this nature and that is where your own responsibility pays an important part. Here are two examples of exactly the same claim, but with very different outcomes. They show the two extremes, and in reality claims may fall at any point between them, but the idea is to illustrate the point.

Scenario 1.
The house is about 20 years old, you bought it 10 years ago and 4 years ago you had a loose tile fixed, had the guttering cleared and had some moss cleaned of some of the tiles. The Loss Adjuster looks at the storm damage and recommends payment of your claim in full. Your efforts in keeping the house in good repair have been rewarded!
Scenario 2.
The house is about 80 years old, you bought it 30 years ago. You have never done any maintenance on the roof. There are numerous loose, missing and slipped tiles, and the moss build up and general weathering prove that some tiles have been dislodged for quite some time. The Loss adjuster looks at the storm damage and recommends payment of the claim, but with an amount deducted because it was not in a good state of repair to start with. it is even possible that the claim be turned down completely, and in the worst case he could recommend that the insurance policy is cancelled completely.

When it comes to a claim, the insurance company will take into account the condition of the property prior to the claim event.

You should also bear in mind the importance of insuring the property for the correct amount. Underinsurance combined with poor state of repair will reduce your claim to a fraction of what it would have been. If you want to find out more about underinsurance and how important it is, just click here.

“Gradually Operating Cause”

The same principles apply to “ingress of water”. If the Loss Adjuster is satisfied that the property is in a poor state of repair, then your claim can be reduced or turned down completely. Another common reason for turning claims down for water damage is the assertion that the damage is a result of a “Gradually Operating Cause”. This is when damage occurs over some period of time, possibly due to a small escape of water that remains undetected until it causes some very noticeable damage.

In common terms, insurance is not there to compensate for problems arising from wear and tear

The Two Way Contract…

An insurance company takes you on as a client on the proviso that you will maintain your property and look after it in such a way that damage to it is minimised. If a potential claim occurs, but it is deemed that you have not kept your side of the bargain, then the insurance company has every right to turn you down.

There are obviously grey areas and should you feel that you have had a claim turned down unfairly, there is a process by which you can appeal a decision and even complain if you feel strongly enough. I have previously written about this in the post, How to Complain Effectively to Your Insurance Company

I hope you never have to deal with the aftermath of damage caused by the weather, but there is no guarantee you won’t. You have taken out insurance to protect you against such things, but to stand the best chance of getting your claim paid in full, you need to fulfil your side of the bargain first.

Spending less than £500 on insurance through a Broker is a waste of money.

How I helped my Mother for the first time in 35 years!

My mother (yes, she is still around!) became an accidental landlord a few years ago and has always sorted her own insurance and finances. It’s not that we don’t get on, I just made a rule when I first started out that I would never advise close friends or family. I would always offer an opinion if asked, but I always put some distance between my personal and professional life. I had two reasons for this, firstly, with the best will in the world, things can go wrong; a lost form, a missed direct debit, an underwriting mistake, the list is endless and having to explain and put right things when it involves the nearest and dearest is just not worth the grief.

The second reason became obvious to me when a friend of mine started work years ago with one of those long gone and not missed companies like General Portfolio or Allied Dunbar. I honestly can’t remember which one, and there were others just as bad, but collectively they, shall we say, were very focused on “the sale”. One of their training techniques was to present to a group of new and naive salespeople with a scenario that demonstrated the perceived need for, for example, Life Insurance. It went something like this:

Trainer: “Did you know that 17 out of 18 people with children under the age of 12 do not have any Life Insurance?”

Class of simple salesmen: “Good grief, that’s terrible”

Trainer: Isn’t it just! How many of you here today have children under 12?

Class of simple salesmen: *many start counting on their fingers – some of the brighter one’s put their hand up*

Trainer: Ok, How many of your friends or family have children under 12?

Class of simple salesmen: *All confidently put their hand up and enthusiastically mutter positive mutterings*

Trainer: “How would you feel if one of your friends and family died leaving those children in financial dire straights”?

Class of simple salesmen: *Universal declarations of feeling devastated*

Trainer: OK, you have a pen and paper in front of you. Write down the names of ten people you know with children under 12. Put your name at the top.

Class of simple salesmen: *scribble scribble*

Trainer: All finished? OK, hand all those lists to me.

—Training session continues on a different theme until 5 minutes before home time—

Trainer: Thanks for all your work today, we will meet again this time next week. You remember those lists that you wrote earlier? Well, I’m handing copies back to you and your homework for this week is to make appointments with all of them and sell them some insurance. I will be giving copies to your managers.

Class of simple salesmen: *Collective looks of abject terror coupled with fear of losing a well paid job*

I should point out that this was the case about 25 years ago and was one of the reasons that regulators became necessary, the selling techniques used now are a lot more subtle! The lesson I learnt was that if you have to rely on friends and family to do business you are either no good at what you do, or, its a bad business.

Back to my Mother…

Anyway, back to my Mum’s landlord insurance. She has remained loyal to a local broker for this insurance since she has had the property and, in timely fashion, she was sent her renewal. This time though she gave me a call and said the premium had crept over the £200 mark and what did I think of the price?

Those of you that have read my posts before will know that I am a huge fan of brokers, but there is a but. I think that nowadays a broker should be qualified and preferably chartered. They should devote their time to helping people get the right insurance at the right price using their experience and knowledge. The current marketplace means that I do not see how they can compete with the direct and online offerings with regard to the simpler products that generally cost less than £500. (unless it is part of a larger portfolio of business). I do not see the point of going to a high street broker, speaking with an unqualified adviser who is following a script and will refer me to the insurance companies own customer service for any queries and, I think anyone who does is at best misguided or just mad.

Renewal £203, includes Admin Fee of £15 and commission of about £40. Good value?

The renewal was £203 including a £15 admin fee. I am familiar with the commission levels and a typical landlords policy will pay 20% – 25%, I have even seen up to 30%. A number of insurance companies provide brokers with online quote systems which offer the flexibility of letting the broker choose the level of commission they can take. This is why when you call about a renewal and say you are thinking of changing providers, the price can sometimes drop quite quickly.

I went online, put her details in and instantly got a quote for £156. The insurance company was a household name, the cover was the same and they offered 24/7 telephone claims support. I clicked “Buy” and the documents were with me instantly. Mum was happy. Very happy. And so should the broker be. Why they are spending time, money and effort chasing a market they really can’t compete in I just don’t know. I happen to know that they are mainly staffed, at customer facing level, by minimum wage and non qualified people who are not allowed to give advice. They are offering nothing that cannot be done online by the customer themselves. So…

Be good to your Mother – shop around!

 

Why I loathe Direct Debits and why you should put up with them

Why they don’t want you in control…

 

I’ve been told that about 45% of all banking transactions in this country are made by Direct Debit. That figure doesn’t surprise me, but I can’t vouch for its accuracy. What I can say is that I can’t stand the damned things. On the other hand, companies love them. The reason for this dichotomy is one and the same – control. I like deciding what I am going to pay, when and how. For me a Standing Order is great, I instruct the bank to pay someone a specific amount on a specific date and I decide if and when I cancel or vary it. This is bad news for a business whose primary objective is to put processes in place that will generate maximum income from minimum administration. A Direct Debit is the perfect solution for them. The customer signs an instruction allowing the company to take an amount from the customers bank account and it hands control straight to the company. Add some terms and conditions that allow the company to vary the amount, have a company policy that doesn’t allow Standing Orders, perhaps include a penalty for any other methods of payment other than Direct Debits – but make sure its called an admin charge rather than a penalty, and there you have it. A system that boasts that it is the “favourite way” of paying for things, whilst brushing over the fact that no other system is allowed to grow into a practical alternative.

Look at this lovely Guarantee…

Yes, it offers a guarantee whereby if there is an error you will be refunded. Or, to put it another way, if there is an error, and you notice it, they will refund you your money that they shouldn’t of taken in the first place. Some might say that there is another reason why companies love them, and its linked to the if “you notice it” bit in the previous sentence. Now, please do not be offended oh delicate reader, but with the best will in the world, I have to say that I have come across a lot of people who are a tad lazy when it comes to checking their bank statements. That may well be you. Insurance companies love you paying premiums by direct debit because there is more chance you will renew with them because of this common chain of events:

The payment goes out monthly,
the renewal is sent,
a promise is made to shop around,
the envelope is put in the pending tray,
tempus fugits and the next thing you know is that the first payment of the new policy has been taken automatically.
A certain amount of muttering ensues and well meaning promises to do better next year are made.
Heres an idea –

SORT IT OUT NOW – DON’T WAIT UNTIL NEXT YEAR!

George’s step by step guide to living with the necessary evil that is Direct Debits.

1. Look at your bank statements for the last 12 months and note down every direct debit.

2. Put a question mark next to every one that you cannot immediately identify. Then, find out from your bank what they are.

3. Contact the companies in question and find out just what exactly you are paying for.

4. Immediately cancel any that you do not need any more.

5. Shop around to see if the rest can be arranged at better value elsewhere.

6. Buy appropriate amounts of cake with any money saved.

There, it really is that simple. Thousands of people are having money taken from there bank every day by direct debit using arrangements that either should have been cancelled or re-negotiated. Make a RetiredBroker happy and make sure you are not one of them.

Car Insurance for Young Drivers

Swapping your Mum for a Car Insurance Black Box

As young drivers, you have probably experienced the shock of finding out the cost of your first car insurance. Then, having passed your test, you will experience the cost of that insurance going up. This comes as a surprise to a lot of people. However, there is a logic in play here. When you are learning, you are under supervision. Someone is with you and your focus is learning to do things right and practice for a test. Once that is behind you, you’re free! On your own, or even with a bunch of friends the same age in the car with you. Its no longer your mum giving you sensible advice, it might be your your annoying younger brother instead. One way to possibly help with cost is to swap your mum for a car insurance black box. It’s a form of “supervision”, but without the constant er…shall we say…”advice”.

What is a “Car Insurance Black Box”?

It can also be known as “Telematics” or “Pay as You Go Car Insurance” by some companies. Keeping with the insurance industry’s exciting and innovative way of naming their products, this gets its name from the fact that the small device is both box shape and usually black. It is about the size of a smartphone and its job is to send information back to the insurer about your driving.

Myths and Bunkum

There are a lot of urban myths about these devices, some are complete bunkum, others are kind of based in a sort of truth which has been through a politicians speech edit. Here’s some examples:
  • The Insurance Company will automatically inform the Police if you are Speeding

Bunkum. Don’t get me wrong, you shouldn’t speed, it is illegal, dangerous and wears your tyres and brakes out faster, so trying to save money on insurance while at the same time regularly speeding, makes you a bit of a twit. If you are involved in an incident and the police are interested, they can request information obtained through the black box, and use it either to help you, or prosecute you, depending on what it shows.

  • Having a Black Box fitted will Void the Cars Warranty.

    Bunkum. Nothing really to add here. Just Bunkum.

  • The Insurance Company will use the Information to prove you were to Blame for an Accident

    Maybe. If an accident was your fault, the information may help to prove it. On the other hand, it can just as easily do the opposite. If you say you were hit while stationery, the Black Box may well be your best friend.

  • The Black Box will Interfere with my Sat Nav or Car Radio

Not at all likely. Fitted properly, a Black Box is extremely unlikely to interfere with any other electric devices in the vehicle.

  • My Insurer will not Cover me if I Drive outside of Certain Times

Mostly Bunkum. Some insurers will insist that you drive only at certain times, during the day for instance. You may have put a restriction on yourself in order to keep costs down and you, in all good faith, had every intention of keeping to those restrictions. However, things can change. You may get a call from someone asking you to take them to hospital during the night. Or you may have been out for the day and the traffic is so bad on the way back it takes hours longer than you anticipated and into your “curfew”. No decent insurer is going to question this. Where they get rightfully interested is when the information being sent back to them via the Black Box shows a constant disregard for the restrictions in place. In that situation, its time to review the restrictions.

  • It Costs to Have a Black Box Fitted

Sort of True – sometimes. The fact is that a few providers will make a charge for fitting the device, many do not. Like all insurance policies there can also be admin charges for any changes to your policy during the term and a charge for the removal of the device is not uncommon. I may have mentioned this before….READ THE TERMS AND CONDITIONS FIRST!

What Information Does it Send Back?

The purpose of the box is to build up a profile of your driving style. The information it can send back may include:

  • Speed

  • Acceleration

  • Location

  • Distance Travelled

  • Time of Day

  • Cornering

  • Braking

  • Types of road usually used

  • Length of time driving

It is easy to become a little paranoid about what could be described as a “Big Brother” system where all your movements are constantly monitored. It certainly is not for everyone, and that’s fine, but if you are comfortable with the idea it can save you money. Remember, the insurance company is building up a profile of your driving style in order to assess you in terms of risk. If you suddenly have to brake hard in an emergency, you shouldn’t be worrying about whether you are going to be penalised by the insurance company. They honestly do not care two figs if you occasionally brake late, speed or once in a while drive for four hours without a break (though its really not a good idea is it?)

Who is it Good For?

It is mainly promoted for newly qualified or young drivers. There is no getting away from the fact that this group has statistically more accidents than any other. If you are in this group, then your insurance is based on the statistics amassed from everybody in the same group. Using a Black Box is a way of personalising your insurance to just your style of driving, and may potentially save you money.

Everyone can in fact use this method for their insurance, though far fewer experienced people with full protected no claims bonus use them. Other groups that may find it worth looking into include:

  • Drivers that do very low mileage

  • Newly UK resident drivers

  • Drivers with convictions

  • Drivers with a poor claims history

 

Can I See the Information that is being Collected?

Most insurers give you website access to your account and you can see all the information that is being collected about you. You can see how your driving style affects your profile and then adjust the way you drive in order to make improvements, and possible reduce the insurance cost.

What are the Drawabacks?

The main one, and most uncomfortable, is that you may not be as good as driver as you thought you were! It is entirely possible that your particular driving style is not one the insurer likes and the whole exercise could end up costing you more. You could turn this into a positive though and use the evidence to have a bit of a think about improving your driving habits.

Another is that you may have underestimated the amount of miles you drive and the cost of insurance will increase as the true number of miles you drive becomes apparent. Like going over your limit on your mobile phone though, the insurer should keep you informed as to whether you are getting close to the mileage you gave them.

If it turns out that you are actually driving at peak times on busy roads, when you originally told the insurer something different, then you could find the cost of your insurance increasing.

Although the principles are pretty much the same with all providers, there are some subtle variations so if this is something that may interest you, then be sure to find out all the details before applying. One last thing, having a Black Box fitted means that if the car is stolen, it will be easy to track and find!

 

How to Make Sure Your Clothes are Insured

Imagine you have no clothes…

OK, I’ll put that another way. Imagine you have no clothes…apart from the ones you are wearing! That is, no clothes, no shoes and even no handbags or manbags. You have to go out today and buy a complete new wardrobe for you and your family.

How much you you have to spend on replacing everything – and how would you afford it?

For some, it won’t be just a question for the imagination. A serious fire or flood are just two incidents that could make such a question reality.

Most peoples wardrobe is something that gradually evolves over time. Quite often you won’t give a second thought to how much you have spent on clothes and accessories over a number of years. If you have children, it might be more of a “front of the mind” thought as the cost of shoes and other “must haves” are usually bought more frequently.

If you have a job that has a certain dress code, you may have items that are just for work. If you are suddenly without these, you still have to go to work and it might raise a few eyebrows in the office if you turn up in your star wars onesie explaining that its all you have until payday. Assuming you are insured, it may take a little while for even an emergency interim payment to come through, so it may be the credit card as the only immediate option.

You are probably not insured for the replacement cost of your clothes and shoes

Assuming you are insured, do you know how your insurance company will settle a claim for clothes? Do you know how much you should insure your clothes and shoes for? While I am not stopping you from immediately going through your drawers with a fine tooth comb and listing every last sock and belt, it probably would be a bit time consuming and not that productive. However, it shouldn’t take to long to just quickly go through the main items and quickly list a replacement cost and then total it up. You may be surprised at the result, a total of a few thousand pounds can quickly be reached. If you have designer clothes then the total can get much higher. If you do a sport or a leisure activity, the average cost of clothes required for it are usually much higher than your everyday clobber.

Once you have a figure, you can then turn your attention to just how your insurance company treats clothes and shoes in the event of a claim. Almost always they will be covered, but, even if you have a “New for Old” policy, they will be often only covered for their “second hand” value. This means you will get either the cost of replacement LESS AN AMOUNT FOR WEAR AND TEAR or an estimated second hand cost. To make this clearer, here’s a simple exercise for you to do right now. Go to your wardrobe and pick out an item of clothing that you feel you spent a fair amount on, preferably something with a known label. Now go on to Ebay and type into the search box the make, style and size of the item you have chosen. Make sure you click the “used” button and you may have to do a bit of digging in order to find the same or similar item. Now look at the price on Ebay and compare it with what you remember paying for it. I’ll bet there is a bit of a difference. A slight quirk is that usually bags are considered as “contents” rather than “clothes” and as such you may find that you will get the full replacement cost in the event of a claim.

So what can you do to make sure you are covered properly?

Firstly, get the figures right. Make sure you know just how much replacing everything would cost. Then talk to your insurance company and tell them what it is you expect from the policy. If it turns out that they are not able to give you the cover you want, then its time to look at the more specialist type policies that are available. A lot of companies will offer a higher degree of cover than that which is available from their standard products if you ask, and there are a number of “High Net Worth” policies which will allow you to have greater degrees of cover, especially if you have designer or vintage clothes or shoes.

One last point. Your claim doesn’t necessarily have to be for a replacement for the item damaged. It may be that the cost of cleaning or repair is a more cost effective option for both you and the insurance company, so before you write anything off completely, check to see if that is a viable option.


What Does An Insurance Broker Do?

F-questionI chose the title of this blog in order to keep things as broad as possible. However, I did consider other titles such as:

What Does an Insurance Broker Do, and Why should You Use One…Or Not

or

What Should You Expect From Your Insurance Broker?

 

You will notice how I have now cleverly incorporated all the titles I couldn’t decide between! The truth is, they are all good questions and I will try to do them all justice.

 

In short, a broker acts on your behalf in order to find the best policy to meet your needs.

Lets break that down a bit…

 

“Acts on your behalf”

This is true. By using a broker, you are effectively appointing them as your representative in all matters to do with the product you are buying or researching. The broker will also act on behalf of the Insurer in certain regards. These are in the main administrative, such as the authority to issue documents or administer the payment process.

There is also an obligation on the part of the broker to make the insurer aware of anything that may affect the insurers decision to hold cover. This means passing on as much information as possible to the insurer, and it is this element that sometimes I have been questioned about over the years.

The situation is actually quite simple. If all relevant information is given to an insurer, and after consideration they proceed with the policy, then everyone can comfortably go ahead with their lives knowing that in the event of a claim the insurance company has been in receipt of the full facts and the claim should be handled quickly and efficiently.

If, on the other hand, not all the relevant information has been passed on, then you can expect the claim to be subject to further scrutiny which, at best will slow things down. I should make it clear that is is now normal practice for insurance companies to distinguish between those cases where information has genuinely been omitted due to human oversight, and those where information has been deliberately concealed in order to obtain cover that otherwise would not have been granted.

Where a genuine oversight has occurred, I have always known things to be sorted out amicably. Unfortunately, there are people out there who don’t do things properly and with bad intent. In those cases the insurance company can cancel the policy as if it had never existed, and ultimately, in certain circumstances prosecute for attempted fraud.

 

A good broker should take the time to get all the information they need from you, and then present it in such a way that the insurer can make a quick decision.

 

“Find the best policy”

A broker will always try to find the best policy to match your circumstances. Wherever I have worked, I have never experienced anything other that the overwhelming desire to “do what’s best for the client”. However, the plain truth is that brokers do not have access to every product and I cannot see how anyone can categorically say that the policy being recommended is the best one.

It may well be the best one from those that broker has access to, but the current marketplace means that no one can actually choose from all the available products and providers. A lot of products are now only available online, or through specific high street channels such as banks and supermarkets, none of these will be available through a broker.

Typically, a broker will have agencies with a number of insurers. Not all insurers will grant a broker an agency. That’s not to say there is anything wrong with that broker, it may be that the insurer wants to insist on receiving a minimum amount of business that cannot be provided. It may be that the insurer feels it has enough brokers promoting their products in that area. It may be a number of reasons which in honesty do not matter. The point is that a broker can search the market for you, but the market being searched does not, and never will, include all the options.

With the rise in popularity of online brokers or “comparison sites” as they are more often called, it is becoming very difficult to justify using a traditional broker for the more straightforward car, home and travel insurances. A good broker will offer advice in these areas, however, given the rewards to the broker being offered for selling these products, especially the low levels of commission being offered for car insurance, it is just not cost effective to be active in that marketplace.

 

“Meet your needs”

I guess you wouldn’t like to be called “demanding” or “needy”. Yet, as far as insurance is concerned, you are, and here’s why; in order for you to be given a policy, you will, at the very beginning, be asked a number of questions, this can be verbally or online, even on paper and this can be in person with a broker who is able to advise you, or completely automated. The initial purpose of this questioning is the establishment of a “Demands and Needs” statement.

This is a document in which you state what it is you actually want. It will include sums assured, particular items to be included, in fact everything that you want a policy to cover. The broker or insurer then uses that as the basis of the product you will be shown. If there is anything on your “demands and needs” list that cannot be met, then this has to be pointed out to you. A copy of the “Demands and Needs” statement should always be included in the brokers paperwork that is sent to you. Read it. Make sure it is what you want, because if it is missing something there is a chance it may not be included in your policy.

 

Should I use a Broker?

It is very difficult to say that a broker is the best route for straightforward Home, Car and Travel insurance any more. Even in my final years in the business, I was using comparison sites and tellingly, so were my colleagues. Even some of the small business insurance is becoming more appropriate to find online. as long as you read everything that you are being asked to, then the non-traditional-broker option is both keenly priced and nowadays almost always supported by a 24/7 service.

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