1 Eagleton Notes: Insurance - Fair Deals

Saturday, 29 December 2012

Insurance - Fair Deals

I have always been a believer in insurance.  It's just in my nature.  It has also stuck in my memory indellibly from my law study days that contracts of insurance are contracts uberrimae fedei ie they are contracts of good faith.  Basically what that means to you and me is that we must declare anything and everything which may be relevant whether or not we have been specifically asked.  In particular if any of the insured circumstances change then the insurance company must be told.  For example how many people undervalue things or pretend that they are the principal driver of their child's car to keep premiums down?

It also means that the insurer should demonstrate good faith.  Many people will testify that they do not and try to wriggle out of any payment if they can find the most tenuous of reasons.  I have to say, however, that I have always been fortunate and scrupulous honesty has been met with fair and reasonable payouts. 

However a relatively new practice has reached an unacceptable peak: the year-end premium hike.  I quote from a friend's email today:
"My AA (not that AA) [the Automobile Association not Alcoholics Anonymous for the benefit of non-UK or NZ readers] renewal came in.  They want more money, but offered me 'extra' services (as I'm a valued customer), none of which I want.  They wanted £277 per annum.  I went on-line.   They are offering what I have for £144 per annum. 
The RAC are offering the same for £149 per annum. I phoned [the AA].    We can offer you a loyalty discount of 35%, she said.  No, cancel it, I said, and I'll renew it tomorrow on-line for £144.  OK, she said.  I didn't.  I went to the RAC.  That'll teach them.  Next year, when the RAC do the same, I'll cancel it and go with the AA as a new customer."
I pointed out I have my breakdown insurance with GEM Assist and pay less then either of the above charge for a service deemed by the magazine Auto Express to be superior.

A friend's daughter who worked in insurance advised that, to achieve the best rates, one should always cancel annual insurance and then take out new insurance even if it's with the same company.

This post is unlikely to change anything in the industry but it may help a few readers get a fairer deal.

19 comments:

  1. Thanks Graham, my car insurance is due to be renewed next month. I've been with the same company for 5 years and I have a feeling that I don't get much for being loyal. (The same with mobile phone). I will definitely look for different insurer. All the best.

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    1. You are welcome Agneszka. I hope that 2013 is a Good Year for you.

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  2. Personally, I have never had much to do with any insurance except for health insurance, which is ridiculous in what it costs me as opposed to what I get from them when, for instance, I need new specs (by no means a luxury for me, but of existential importance in my daily life). That insurance is, however, compulsory, so I can not do much about it.
    My parents, on the other hand, have had good experience with the insurance on their allotment. When some years ago there was considerable hail and storm damage to the little house and many plants, they were asked to list every damaged leave and bud (so to speak), and got a very fair and generous replacement. Two of my parents' friends helped with re-tiling the roof, and the lady from the insurance my Mum spoke to said they should list how many hours the men worked on the roof, and that was paid for as well.

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    1. I know someone who didn't insure his flat for several years Meike and it was one of the few things that I worried about for him. A simple fire (even in one of the other flats) and he could have lost so much. A fire and two hurricanes have made business and house insurance worth my while over the last 40 years (though possibly I have paid more in premiums than I have received overall). Our UK national health insurance is compulsory too and if it wasn't for our national health service my parents could never have afforded the operation to have my lung removed when I was a teenager and my cancer treatment and heart medication must cost a great deal more than I ever paid. As a pensioner I no longer have to pay for health treatment in the UK.

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  3. Thanks for the heads up. You've got me curious now, so I'll have to check it out!

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    1. I hope that it has been some use to you Lisa.

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  4. Yes, thanks for this too. I have been feeling increasingly disgruntled with my companies. They are getting more and more expensive, and I've been with two of them for forty years or so (!). I may just do what you suggest.

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  5. PS did you notice this was posted on your 'other' blog?

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    1. It's usually worth it although I'm not sure how insurance companies in New Zealand operate compared with those in the UK. Banks certainly operate quite differently. Yes, Katherine, I purposely posted on Eagleton Notes because it related to UK insurance and I have noticed that I'm posting a lot of things on my NZ blog which are nothing to do with NZ. My life is morphing into one now.

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  6. Morphing sounds good. Just don't walk into the wall in the middle of the night.

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    1. I'll pretend I'm animated plasticine and just walk through it.

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  7. Health insurance is not compulsory here...I am not impressed with what is offered anyway. My friends who have health insurance through their jobs all complain about the funds they still have to pay from their pockets for medical tests and glasses etc. Still don't think they honour Chiropractor's services.
    I did have health insurance when I was pregnant with my daughter, and all my bills were paid, but then that company went out of business.
    The insurance company I am with now for my vehicle is the best I've had so far, so it wouldn't make sense to cancel every year. They honour my BARP (Barbados Association of Retired Persons) card with a 50% discount, and I also have free road side service and towing all included in a very reasonable premium for my 1993 Beast...I'm happy.

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    1. Just how difficult would it be for me to move to Barbados? Ah, thought of a snag - well, two. Could I afford to live there? And my chiropractor is an essential, not a luxury.

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    2. Marcel, once you could "afford" to live here, I'm sure you will adopt the island life as your own.
      However, most expatriates complain about the sky-high prices here, and they always wonder aloud how we islanders survive with such exorbitant prices.
      We import everything, and therefore after all the duties and taxes, the final cost to the consumer is sometimes six times the US advertised price.
      The deal breaker may be your non-refund for the chiropractor.

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  8. Opened a vein there, Geeb.

    I naievely believed that as a 'member', my fees for the AA were the same as everyone else's. Wrong. A friend in the same situation was quoted a lesser price for renewal than I. I might understand if they charged extra for older vehicles. Older cars are more likely to break down. Hmmm maybe not. I'll take this away and think about it. In the meantime, I've concluded they're at it. If anyone wants to disabuse me of that notion, I promise to listen.

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  9. It's not just car insurance,GB. Our Comcast bill for television, phone, and internet keeps changing. But when Rob has queried it and said, "how come I, a long term customer, can't get the same rate as a new policy holder for the identical services?" they usually come around and drop our rate to match the others. But it's still galling that if we have to ask and be eternally vigilant. Because I've always believed that the price should be the same, no matter who is buying or asking. Aren't I naive? :o) xoxo

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    1. I've heard other from the US talk about Comcast's practices Carol. The problem of low introductory offers is a difficult one because it is regarded by many commercial sectors as a legitimate way of securing new business (and poaching). However it does seem unfair when existing customers are charged different rates for the same service and penalised for loyalty rather than being rewarded for it.

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  10. My son's theory is they want you to leave, so that you don't notice that the base premium has gone up, That way, they can all increase premiums (premia) in the hope we don't notice. He's a suspicious chap, my son. Where he gets it from, I have no idea.

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