When is a low insurance premium the most expensive?
Updated: Feb 3
How you can save £35 when you least expect it and make cheaper cover more expensive overall....
We are all pretty much 'wired' to price shop for almost everything we buy and grabbing the best deal makes us feel like a winner. However, when it comes to insurance, there are ghouls in the shadows that you must be aware of. For the purpose of simplicity, the 'ghouls' are the clauses in the terms and conditions and the 'shadows' are the terms and conditions. I refer to them as 'shadows' because very few people pay much attention to them and often things are hard to spot in there. As an example; Today, I looked at two quotations for the same type of car related insurance. The first, was £15 cheaper than the second, for the same cover. I'm about to click 'add to basket' and enjoy the saving - but the website suggested I read the terms and conditions first. Whilst I know I should, it's too boring and full of jargon. After a strong black coffee, I reluctantly waded through the small print starting with the cheaper policy and found myself scribbling down some things that concerned me - namely, other charges!
The cheap policy contained clauses (ghouls) that jump out and charge me for making minor changes to my policy, small things like a change of address or changing my registration number. It also plans to charge me £35 to cancel my policy if I decide to change my car early and take another policy with them. Outrageous!
I quickly compared the slightly more expensive cover - and whilst the cost is a little higher, it was more inclusive. No amendment charges and no cancellation charges if I change my car and take another policy. A quick mental calculation tells me the cheaper policy will be more expensive if I needed to
make changes or if I wanted to take cover with them again. The cheaper policy was clearly designed to have a lower initial price with the aim of making more from me later.
The above is a simple example but based on fact. Lower-cost insurance may well cost you more overall and will certainly feel less 'customer friendly'. A good example of this is car2cover.co.uk, an online specialist for Gap, Tyre, Alloy Wheel and Scratch and Dent Insurance. They do not charge for minor changes to their policies and do not charge a cancellation fee if you change your vehicle early and 'roll' the unused premium as part payment toward the cost of a new policy for your next vehicle. No other provider appears to offer this which for many, is likely to represent a later saving of £35. As they say, the devil is in the detail and in this case, the ghouls lurk in the shadows.