An insurance story with a happy ending? Amanda Morrall on how not to get ripped off by your insurance company
In the financial media, it’s good sport to slag insurers. Let’s face it, they’re easy targets.
We pay, and we pay and we pay… and then when we make a claim, they tear it to pieces with loopholes and exemptions written in microprint on the back page of page 10 and we’re left high and dry, and still paying. Okay, yes there are exceptions and there were some happy stories to come out of Christchurch, although they were more like War and Peace length epics by the time the pay outs were made.
So what am I on about this week and why?
Here’s the back story:
I fulfilled a long held dream a few weeks ago purchasing a very cute second hand Vespa. Why buy new when you can save a get a really good barely used one? Anyone who has read my book (you can order now off my site) or my blogs will know I’m big on dream fulfilment and doing what you love instead of just imagining it all the time.
But I digress. When I went to insure the new yoga transport, I started making the requisite calls. I was a little startled to find out, that it was going to cost $10 more for a 50 cc than my Honda Jazz. Big deal right? No, because when I made the call I also discovered that due to a postal code change that somehow slipped their attention my premiums on the car almost doubled!
Before I committed, I told the operator I was going to shop around, as you really SHOULD DO when shopping for insurance, or anything else for that matter.
A quick phone call, to a very efficient, and yes reputable insurer with an investment grade rating and I managed to get the car – and Vespa – insured for an extra $10 a month from my original bill. I had to pay for the whole lot up front (they promised to reimburse me if I sold either vehicle) but I put down the phone happy in the knowledge that a) I’d be driving my scooter soon (the roading costs of which I will easily regain in petrol savings) and b) knowing that one phone call saved me $600. This is not a small margin folks. It’s HUGE.
Of course, the devil is in the detail with these insurance covers and probably without realising it I was paying for all the bells and whistles on the last package which I’d blindly agreed to when I was probably in the position of most customers; completely in the dark about how seriously ripped off you can get by not knowing what you are paying for exactly and not shopping around.
Don’t get me wrong, I’m not suggesting that going to the lowest cost insurer is necessarily the best move. I saw several businesses and residential home owners in Christchurch suffer after going that route via unscrupulous brokers who got paid a tidy commission for selling cheap insurance on behalf of dodgy insurers, one of whom had actually been blacklisted in Australia. I kid you not. Our reputation as the Mexico of the South Pacific is, sadly, sometimes deserved.
Now before I get letter bombed by insurers, PLEASE NOTE lots has changed in the regulatory world in recent years to raise the bar in New Zealand, and in doing so, holding financial service sector operators more accountable to their customers.
The bottom line here is:
What do you have to lose? I gained $600.
For more helpful tips on “How to get your money and life sorted”, check out my book Money Matters.”
Amanda is a personal finance expert who draws on Eastern wisdom to help you grow your wealth and wellbeing. Money Matters was published in 2013 by Penguin Random House in NZ.