Car Care: It pays to check your insurance
Stay on top of changes and your insurance premium may drop
How often do you review your insurance policies, including motor vehicle cover? If you’re like me, it doesn’t happen often.
Many people regard insurance as a necessary evil, a topic not regularly discussed unless a claim is made. In some cases, because a good deal was negotiated a couple of years ago, people believe it’s not worth revisiting.
I got the wakeup call when friends asked me whether I thought their late-model SUV was overvalued in regards to their insurance cover.
My standard answer, regardless of whether it be for insurance or selling purposes is usually yes, it is too high. Why? Because most people believe their motor vehicles are worth more than they are.
Usually there’s no real harm in thinking that way until it comes time to sell, but what happens when insurance cover is being negotiated?
I’m sure valuation plays a significant part, so if you’re looking at reviewing your policy or wanting cover for the first time, it wouldn’t hurt to ask the following questions based around the insured value:
• Does the policy cost change significantly if the suggested value of the vehicle is reduced? Today’s top-end value will most likely not be the true value in 12 months, so is it best to strike a middle ground in working out the insured value?
• Are the policy costs based on an agreed value or market value at the time of a claim? In other words, if the vehicle was written off 11 months after taking out the cover, how is the pay-out calculated?
• What is the excess if you have to make a claim?
• Can you pay less for the policy but a higher excess?
Because it’s such a competitive business, most reputable insurance companies offer good insurance cover overall, but they also rely on their customers informing them of changes that may affect policy costs.
Yes, you may get a better deal by ringing a rival insurer, but only because they have asked you a bunch of relevant questions and you have given them answers based on a different lifestyle or situation.
For example, are there other nominated drivers on your policy who don’t drive the vehicle anymore; is the vehicle now garaged regularly or has an alarm been installed?
Policy costs may change by keeping your insurance provider updated.
On the flip side, you could end up paying more if circumstances change and the risk to the insurer increases.
But even then, isn’t it better to have the record set straight rather than believing the vehicle is covered for every situation when it’s possibly not.
For me it was a change in address. My vehicle was, according to my insurer’s records, permanently based in Auckland.
When I told them it was now regularly garaged out of Auckland and away from the busy city environment, my policy was reduced by more than $100 a year.
Plus I’m getting a small refund for the amount I have been overcharged.