Foreign Perspectives

Archive for the ‘Insurance’ Category

You usually expect companies to put a positive spin on their products, even when they’re not so good so I try to downplay such messages in my mind to see what the true picture is.

So, I was a bit thrown by the recent car insurance renewal from Axa. They had their main marketing message in big letters (“10% discount for renewing online” and the usual promotion of the insurances that you don’t yet have with them). However, the insurance renewal at £78/month seemed a bit expensive and when I checked it certainly was as it was only £25/month last year. Net effect of that being that I was getting together the information I needed to get a quote elsewhere. After all, tripling the insurance was a bit much.

They are just lucky that I read a bit further though. It seems that the £25/month was actually over 9 months with an initial deposit bringing the total to around £275 whereas the £78/month is over three months with an initial deposit bringing the total to almost exactly the same total.

Talk about bad marketing! I wonder how many customers they’re going to lose by presenting an insurance quote that appears to triple the cost but actually leaves the total almost exactly the same?

If you’re a young driver then insurance companies are basically going to assume that you’re a bad driver simply because of the statistics.

However, clearly not all young drivers are bad drivers. But if you’re one of the good ones, your problem up to now has been proving it. That’s where technology has finally come in for young drivers car insurance in the form of what’s essentially a consumer version of the device installed in trucks to keep track of the driving habits of the professional drivers.

What this does is to record your driving so it’ll keep track of the length of your journies, your speed, how fast you accelerate and brake, etc. From this the insurance company doesn’t need to assume anything about your driving as they can see exactly how you drive which, hopefully, will lead to lower insurance rates for those young drivers who are good drivers.

When the welfare state was set up in Britain back in the 1940s, it had the laudable aim of supporting those in time of need and the expectation that those in need would want to get out of a dependence on benefits as soon as they could.

The effect of that was that, over time, the amount paid out to people on benefits gradually increased. Initially the level of benefit was set very much at the subsistance level but the amounts involved have increased over the years with the aim being to have the payments at slightly less than the average wage. However, simultaneously with those increases has come a restructuring of the benefit system ostensibly to target those most in need and that’s where the problems are becoming apparent.

For example, take a typical family of two adults and two children which is what the original welfare state calculations would have been based on. Should the man become unemployed (another welfare state assumption was that the man was the wage earner) then they would be entitled to payments of approximately £60 for the adults and £55 each for the children (including the child benefit). That’s a total of  £170/week, £740/month or £9000 per year. Since the benefits are tax-free, that’s the equivalent to a salary of around £14,000. Not great, though there would be additional help in the form of housing benefit, free school meals and a few other things.

However, let’s take an example of two adults plus ten children. Too many children? Well, no, because families of that size are increasingly common in some areas for reasons which will become apparent shortly. Each child adds £55/week so the totals now come to £600/week, £2600/month or £32000 per year. Bearing in mind that the benefits are tax-free this equates to a salary of around £50,000 and, of course, there’s the housing benefit, free school meals, etc. Even though I’m quite highly qualified, I would find it difficult to get that level of salary.

Now, I accept that people with large families don’t necessarily have them to pick up massive benefit payments but even if they don’t, surely there should be some kind of limit in terms of a maximum benefit payment regardless of other circumstances? If not, it would appear that the best plan would be to pop out kids on a regular basis: it can’t be right that the benefit system seems to be actively encouraging that.

Most people don’t consider it a big deal if their house (ie buildings) and home (ie content) insurance isn’t with the same company. After all, why not just go for the cheapest in both categories?

That sounds fine and it may well save you some money but the problem with the UK home insurance market is that insurance companies that do content insurance have a list of stuff that counts as being “content” and a different list of stuff that counts as being “buildings”. Unfortunately, these lists aren’t completely identical between the various companies so you can find some things listed as “content” by one company that will appear on the “buildings” list of another company. That discrepancy is why it’s essential to keep both policies with the same company.

Most of the time it won’t matter. After all, clearly the bricks are part of the building and clearly the furniture is part of the content. What about something like an outdoor BBQ that incorporated a seat made from bricks? It might seem a somewhat contrived example but there are lots of similar grey areas that insurance companies create through these different lists.

Don’t forget too that if, even if you’re lucky enough to have any problem that arises completely covered by two different companies, that means that you’re looking at two separate insurance excess payments which these days can mean anything up to £1000 or so.

Since the insurance needs of companies tend to be more sophisticated than those of individuals you generally don’t find the equivalent of online price comparison sites in the company insurance market that you expect in the personal insurance market.

So to get corporate insurance you will almost always need to go to a specialist insurance broker which obviously means looking at firms relatively close by your business premises.

However, it’s worse than that in that, for example, to shop insurance Glasgow, if you’re in a relatively specialised market niche you’d need to look for, say, insurance for contractors Glasgow. Well, “worse” in the sense that you may need to be more specific in your requirements of an insurance broker but if that broker is more familiar in dealing with your type of business you’ll generally save a lot of hassle in explaining what you do and won’t miss out on essential insurance that’s specific to your industry group. Not only that but the specialists will know more about the types of policy available to your industry niche too which can save quite substantial amounts of money.

Incidently, don’t be tempted to try to do the cheapo route of just using one of the personal insurance comparison sites as they usually don’t list essential items of business insurance and you could find yourself with an expensive problem should it turn out that you don’t have some legally required insurance or there’s an exemption in the insurance that you bought which means that you’re not covered for doing something that you do quite regularly. These things usually only become apparent after you need to claim on a policy which is obviously a little late in the day.