Premiums may be falling, but that won’t stop motor insurance firms chancing their arm, writes Personal Finance Editor Charlie Weston
Motor insurance premiums are finally falling after years of steep rises.
But that does not mean you will automatically get a better deal this year when it is time to renew your cover.
This is because the renewal quote from your existing insurer is all too often just a try-on.
Insurers use big data techniques to work out who they think will accept a higher quote.
They also identify who will grumble about the higher cost of cover, but do little about it.
In other words, there is one price for the savvy motorists who shop around for the best cover every year, and another for those who accept any quote sent to them.
This is despite the fact that the two drivers may present the exact same insurance risk on the road.
This sinister practice is called dual pricing, and sees insurers discriminating against those who do not shop around – including the elderly and the vulnerable.
And the practice of dual pricing is widespread in this market, according to the Central Bank.
What this means is that the renewal quote is seldom an honest appraisal of the risk a driver presents to an insurer.
Insurance firms know a percentage of people will just accept the renewal quote and they profit off that. You have to shop around, otherwise you will be ripped off.
Manager at brokerage Insuremycars.ie Deirdre McCarthy has warned drivers to be on their guard.
“The biggest piece of advice I could give to any motorist is: do not simply accept your quote from your existing insurer at renewal time.”
She said motor insurance premiums are on the decline.
“So while you may see a decrease in the premium quoted compared with what you paid last year, this does not necessarily mean it is the cheapest quote available to you. Invariably, it isn’t.”
There are currently 20 motor insurance providers in the Irish market, she said.
What this means is that you can have little excuse for not driving a better deal when it comes to renewal time.
One of the best things to do is to plan ahead.
Don’t wait until the last minute. If your renewal date is February 1, then you really should be doing your homework a week or two in advance of this date.
This is to ensure you have given yourself enough time to select the best-value offering when the time comes.
If you find your renewal date is upon you and you have not had a chance to shop around, don’t fret – insurance policies can be put in place in a matter of hours, Ms McCarthy said.
At this stage, it’s probably best to ring a broker and explain that you’re under pressure for time. They will work to get you sorted on time, she added.
If you have other insurance products, such as home, travel or life cover, check out if you are eligible for any discounts for taking out another insurance product with the same provider.
Take advice on excesses, Ms McCarthy said.
Accepting an excess on your policy can be a good way of reducing your costs.
However, if it precludes you from claiming on your insurance then you will have to weigh up what really is the best option for you.
If your situation has changed during the year, such as achieving your full licence, be sure to flag this with your provider.
Consider the named drivers on your policy.
For some parents, their son or daughter may have left home and/or got their own car during the year.
It may no longer make sense to have this person on their policy, and taking them off is a sure-fire way of cutting their costs.
Conversely, if you haven’t put your partner on your policy previously, this might be something worth doing as it can reduce your premium, the manager at Insuremycars.ie said.
Flag any penalty points received in the year. This won’t save you money in the short term – quite the opposite.
But if you have a claim further down the line and you haven’t disclosed these points, then your insurer could challenge your claim on the basis of non-disclosure, which could prove very costly.
As a car decreases in value, so too should the sum insured on the related motor insurance policy.
How to switch… Motor Insurance
Step 1 Get a quote online from a broker like CoverinaClick.ie or McCarthy Insurance Group, which provide quotes from a range of firms. Alternatively, contact a broker you know. You could get quotes directly from insurers, but this could take some time. Also, given that the amount of detail you are asked to input for a quote can vary a lot and affect the final price, you may save yourself a bit of time by picking up the phone to insurers instead of obtaining online quotes.
Step 2 Contact your current firm. See if they can match your best quote. If not, it may be switch time.
Step 3 Switch. To switch you will need to complete an online or offline application form, and send on a copy of your driving licence and existing no claims bonus (NCB) letter, which you should get from your existing insurer, and your payment details.
POTENTIAL SAVINGS: €300