Sun | Dec 17, 2017

Cedric Stephens | Finding motor insurance deals the old-fashioned way

Published:Sunday | November 5, 2017 | 12:00 AM

QUESTION: I am currently in the market for a 2015-2016 Suzuki Swift hatchback.

Its estimated price is $2.1 million. My biggest reservation about it is the insurance premium. Online quotes range from $110,000 to $150,000 plus GCT for comprehensive coverage. I need assistance to figure out the best way to get the most cost-effective deal. I am new to insurance, and this will be my first car. I am a 28-year-old male and work in the banking industry. My driver's licence is two-and-a-half years old, and I have never been in an accident. Can you help?

- shoeblack@outlook.com

INSURANCE HELPLINE: Yes, I can. Your information was sent to six of the nine companies that the regulator - the Financial Service Commission - has registered to write motor insurance. Quotes were sought the old-fashioned way.

Even though I know enough about insurance to write a book and am familiar with insurers' online platforms, I prefer to get quotes the old-school way. Person-to-person contact is always better than dealing with computer codes housed in computers on insurers' premises.

By the way, I wrote this before reading about a customer who could not access his account to pay bills using his bank's online system.

Experts agree that insurance transactions done via the Internet "are compounding the knowledge deficit" - also known as ignorance - and "make things more difficult because people cannot ask questions when buying online".

These comments are from a September 2017 Financial Lives Survey. It was conducted in the United Kingdom for the insurance regulator. It found that generally, consumers were "sorely lacking in knowledge about insurance and how it works". This is also true in Jamaica. Another finding: 12 million persons who had insurance chose the cheapest products. The same number of persons also felt that they did not have the ability to compare products.

Information from the UK study will be used to construct a template to help you, and other readers who are in a similar position, to make better insurance decisions. When the article was ready for submission to my editor, nearly eight hours after my deadline, quotes were received from only three insurers.

 

COMPANY A

 

This response arrived first. All of the important things were included. Discounts were offered for restricting coverage to the policyholder plus two named individuals, and an increase in the standard own damage deductible. Options were offered to pay the premium quarterly or half-yearly.

Extras like 14 days' alternative transportation (loss of use); Increased personal accident cover - $500,000 death/dismemberment, $50,000 medical; uninsured motorist cover; and increased third party liability limits over the statutory minimums were also offered. Roadside assistance was also available without charge.

Standard deductible or excess: 5 per cent of the vehicle's estimate of value or $105,000.

Third Party Limits: Personal injury - $3 million and one person/$5 million any one accident; Property damage - $3 million any one accident/any one period of insurance.

Premium:

1. Open driving - $139,680 plus GCT

2. Restricted driving - $125,712 plus GCT

3. Increased deductible of 7.5 per cent of the vehicle's estimate of value or $157,500 - 10 per cent discount off premium in 1 and 2.

4. Premium payment terms are annually, semi-annually, and quarterly. A service charge of 10 per cent and 12.5 per cent will be added for semi-annual and quarterly options, respectively.

5. Additional costs for the optional add-ons: a) persons living and working outside of St Catherine - $8,500 plus GCT; persons living and working in St Catherine - $11,000 plus GCT.

 

COMPANY B

 

This insurer described its quotation as "theoretical". Also, that there may be other "specific details about this particular insured which could influence the terms". Company B was provided with the same information as Companies A and C. Company B defined 'open driving' as anyone who was operating the vehicle "with the permission of the insured, with a driver's licence more than one year and aged 21 years old and over. Roadside assistance is available without charge.

Standard deductible or excess: 5 per cent of the vehicle's estimate of value or $105,000.

Third Party Limits: Personal injury - $5 million and one person/$10 million any one accident; Property damage - $5 million any one accident/any one period of insurance.

Premium:

1. Open driving - $108,500 plus GCT

2. Restricted driving - $97,500 plus GCT

3. Increased deductible of 7.5 per cent of the vehicle's estimate of value or $157,500 - 10 per cent discount off premium in 1 and 2

4. Premium payable annually in full but financing is available at terms that were not disclosed.

 

COMPANY C

 

This quotation covered all of the important points and, was similar in scope to that of Company A. Discounts were offered for restricting coverage to the policyholder plus two named individuals, and an increase in the standard own damage deductible.

Terms were offered to pay the premium over the course of six months. The company also offers alternative transportation or loss of use at $2,000 per day for 10 days; Personal Accident Cover - $50,000 death/dismemberment, $100,000 medical expenses; uninsured motorist cover and roadside assistance was also available without charge.

Standard deductible or excess: 5 per cent of the vehicle's estimate of value or $105,000.

Third Party Limits: Personal injury - $5 million and one person/$5 million any one accident; Property damage - $5 million any one accident/any one period of insurance

Premium:

1. Open driving - $169,208.28 plus GCT

2. Restricted driving - $156,577.66 plus GCT

3. Increased own damage deductible of 7.5 per cent of the vehicle's estimate of value or $157,500: not available

4. Premium payable annually in full, but financing is available over a six-month period.

The premium is only of many things that influences the decision-making process. Another is your attitude towards risks. The devil is in the details.

Bear in mind also that if one was to examine the wordings of the policies of the three insurers they would not be similar. Also, they have very different ideas, practices and principles when it comes to the matter of dealing with claims.

It will ultimately be your job to figure out, based on the work you and I have done, which quote represents the best deal for you. Good luck with the homework.

- Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com.