Left paying the price for cheapest option
YOU get what you pay for ... a comment we've all heard in relation to electronic goods, airline tickets and now insurance.
As the 75,000 motor customers of Setanta Insurance – which went into liquidation on Thursday – and their brokers seek to replace insurance over the coming days after being left exposed to having no cover at the roadside, many customers will be reflecting over the weekend and asking themselves: "Was it worth saving that €50 at renewal now that I have to pay another unexpected €500 for cover?"
Setanta Insurance is not an insurance brand many will be familiar with as it sold its products through brokers throughout the country.
In January it commenced a withdrawal from the market no longer offering renewal terms or new business prices and on Thursday the business went into liquidation, leaving doubt over the settlement of claims and cover for existing customers. The Central Bank quickly advised existing customers of the insurer to seek cover elsewhere.
For many of Setanta's customers with vans and who are reliant on their transport for their day-to-day business, this has come as a shock and they face an unexpected additional cost.
In addition to the cost there is the time it takes to source a new insurer at a fair price and to sort out the paper work.
For those with claims outstanding, there are additional questions and concerns.
So is there anything you can do to ensure you are not going to fall into this trap again?
* Many customers and businesses focus on the price when selecting their insurer. Remember the cheapest cover is not always the best.
* Ask yourself if it is an insurance brand you've heard of?
Getting a price is one thing but if you haven't heard of the company, who are you going to deal with when you have a claim or need to make changes to your policy?
* Know who your insurer is. Many people quote their bank or insurance broker name as their insurer when it comes to car and home insurance – these are not insurers but intermediaries or advisers placing business with insurance companies.
* Find out how long the company is in business. Companies such as Liberty Insurance, Aviva and Axa have been around for more than 100 years and and are unlikely to disappear overnight.
* Check if the insurer is part of a large secure global group. If it is, it should have the safety of the parent company who can step in if there is a problem.
* All insurers in Ireland are subject to consumer regulation set down by the Financial Regulator. However, not all are financially regulated in Ireland.
Regulated insurers must meet the stringent financial requirements of the regulator, which give protection to policyholders. That protection may not be the same for those financially regulated outside of the State.
* Find out if your personal information and policy will be serviced in Ireland. There's a certain comfort in knowing that if you have a problem and need to contact someone, the person at the other end of the phone is in Ireland and not in another continent.
Remember these are not just things which should be borne in mind for motor insurance – the same rules apply to home and business insurance too.
Arm yourself with the right information when choosing any insurance.
Trevor Lowry is head of personal lines underwriting at Liberty Insurance
Sunday Indo Business