Tracking down insurance deal for first-time auto buyer
QUESTION: I am a 28-year-old man. My driver's licence was first issued on May 22, 2013. I am considering buying a pre-owned vehicle. What are some of the things that an insurer would want to know in order to decide whether or not to insure me? There were articles in this newspaper a few weeks ago about big premium increases for persons of my gender and in my age group. What can I do to get a good deal?
L.P., Kingston 5
INSURANCE HELPLINE: Getting information - conducting research - before deciding on a course of action is always good place to begin. This is advised when entering into insurance transactions and other types of activity, especially those involving contracts, laws or dollars and cents. Failure to do so results in nasty, avoidable surprises. Congratulations. This column is a good place to start.
The next is the website of the insurance regulator Financial Services Commission, www.fscjamaica.org. When you get there, click on 'regulated industries'. This will take you to another page that explains the role of the FSC in relation to the insurance industry.
The key point to remember on this page is that "the best gatekeeper (or caretaker) of your financial future is you", nobody else. The consumer who does his homework minimises the possibility of scams and gets better service in the long run.
On the left side of the screen under Insurance, you will see 'Registered Entities/Individuals'. Click on it and then on 'Insurance Companies March 31, 2015'. The names of 10 general insurance companies will appear. It is these companies that form the motor insurance market. One of them will end up as your insurer.
The next stage in your research should involve visits to the websites of these insurers. The clarity and quality of the information, the content, the ease of navigation and the products and services that they offer should give you valuable insights into these companies. That information will also enable you to properly compare their offerings and not base your decision solely on which company quotes the lowest premium.
To find out what an insurer would want to know before deciding to insure you, download a motor proposal/application form. Read it very carefully. This should give you a very good idea of the things that insurer considers to be of importance in writing motor insurance and deciding how much premium to charge. Some of these factors could include:
n The business or occupation of the proposer;
n The make/model/engine capacity/estimate of value of the vehicle;
n The type of coverage;
n How the vehicle will be used;
n The ages and driving/accident history of the drivers.
After you have completed this part of the research, the next thing is to decide whether you need the services of an intermediary - that is, a broker or an agent - or whether you will buy directly with from an insurance company. Some insurers have set up a unit to handle retail buyers like some brokers and agents.
Revisit the FSC website and click on insurance intermediaries. There, you will find a long list of 23 individual and corporate insurance agents and 26 brokers.
Insurance agents - individual and corporate - represent a number of insurance companies. Their job is principally to sell products on behalf of the principals (insurers) for which they receive a commission.
Brokers in law are the agents of insurance buyers. They hold themselves out to be experts in the business of insurance. Like insurance agents, they earn their keep by way of a commission which is deducted from the premium.
Given the fact that this will be your first insurance deal and you will be needing lots of handholding I would suggest that you consider retaining the services of a broker.
Based on the number of companies that write motor insurance, the broker that you select should present you with at least three quotations. At that stage, it will be up to you to decide which company offers the best deal.
If, on the other hand, you prefer to buy directly from an insurer things may get more complicated. This is because not all motor policies are alike. If you are not very careful, you could end up comparing apples and pears.
Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: email@example.com