1 EAGLETON NOTES: December 2012



Saturday, 29 December 2012

Insurance - Fair Deals

I have always been a believer in insurance.  It's just in my nature.  It has also stuck in my memory indellibly from my law study days that contracts of insurance are contracts uberrimae fedei ie they are contracts of good faith.  Basically what that means to you and me is that we must declare anything and everything which may be relevant whether or not we have been specifically asked.  In particular if any of the insured circumstances change then the insurance company must be told.  For example how many people undervalue things or pretend that they are the principal driver of their child's car to keep premiums down?

It also means that the insurer should demonstrate good faith.  Many people will testify that they do not and try to wriggle out of any payment if they can find the most tenuous of reasons.  I have to say, however, that I have always been fortunate and scrupulous honesty has been met with fair and reasonable payouts. 

However a relatively new practice has reached an unacceptable peak: the year-end premium hike.  I quote from a friend's email today:
"My AA (not that AA) [the Automobile Association not Alcoholics Anonymous for the benefit of non-UK or NZ readers] renewal came in.  They want more money, but offered me 'extra' services (as I'm a valued customer), none of which I want.  They wanted £277 per annum.  I went on-line.   They are offering what I have for £144 per annum. 
The RAC are offering the same for £149 per annum. I phoned [the AA].    We can offer you a loyalty discount of 35%, she said.  No, cancel it, I said, and I'll renew it tomorrow on-line for £144.  OK, she said.  I didn't.  I went to the RAC.  That'll teach them.  Next year, when the RAC do the same, I'll cancel it and go with the AA as a new customer."
I pointed out I have my breakdown insurance with GEM Assist and pay less then either of the above charge for a service deemed by the magazine Auto Express to be superior.

A friend's daughter who worked in insurance advised that, to achieve the best rates, one should always cancel annual insurance and then take out new insurance even if it's with the same company.

This post is unlikely to change anything in the industry but it may help a few readers get a fairer deal.