Insurers are hiding the true cost of cover

I am more worried about the excusion clauses than the cost of insurance and changed insurance broker because they could not understand that I did not want the cheapest but the fewest exclusion clauses.
The cheapest policy is too expensive if it never pays out.
Comparison sites never list exclusion clauses therefore you never know if you are comparing like for like.
One company refused to let me see the policy document before I signed up saying I had a 14 day cooling off period.
What is one supposed to do sign up to half a dozen policies to compare them all and then cancel the ones you do not want?

Agree with Neville – I looked at comparison sites when my car insurance rose for a ‘new’ car. The apparent savings were tremendous – but my current insurance company had effectively no exclusion clauses and a “guaranteed” permanent no claims bonus rather than the “warranted” NCB – which meant that however many accidents I have my NCB remains at 75%. Whereas a warranted meant after two accidents you lose the bonus which would increase my insurance by over a £1000.a year

To reduce my premium – I renegotiated my excess from nil to £250 – but even this was waived when a police car crashed into my parked car while I was asleep. soon afterwards. Because the company decided that an accident free 55 years supported my contention the police were totally to blame and they would recover all costs from the police. The new premium is slightly more than comparison sites but I do trust them. I know my insurance company pays quickly with all support needed.

James, if you have any evidence that these charges are not declared up front report the seller to the FSA.

In your piece you say you found the charges before you bought, so they were up front. You are trying to make a scandal where none exists.

You can buy policies that allow flexibility – adding driver/riders or changing vehicle etc – but it won’t be the cheapest policy.

And suggesting that most people have enough knowledge of insurance to safely buy using and online comparison site is appalling advice. Most people need specialist advice from a broker.

Why not explain how the comparison sites work? – if a provider is not selling enough policies they need to adjust their price but they cannot just lop off a few quid without cutting out some area of cover by adding an exclusion or raising the excess. If they did they would not have been treating the people charged the higher price fairly – they interpret the rules to mean they must reduce the cover or service to charge a lower price.

I wish the FSA would actually do something useful for us poor consumers by bringing in a number of standards across the insurance industry in the same way as CAT standards have worked for ISAs. For example, the FSA could introduce standards such that any company wanting to label a product as ‘Home Insurance’, or ‘Car Insurance’, or ‘Travel Insurance’ would have to adhere to certain practices. Any product not labelled as such wouldn’t have to adhere to these standards but that would be a risk for the consumer to take.

One of these practices could be the introduction of standard definitions of cover to make comparing products easier and also allow consumers to see very clearly what they may be not be covered for. E.g. a product sold as ‘Travel Insurance’ could offer ‘Lost Baggage’. The definition of what constituted ‘Lost Baggage’ or what exclusions existed could be defined as part of the standard to be used by all companies selling a product as ‘Travel Insurance’ – the only thing that would vary is the amount of cover (and in some cases the cover could be £0 indicating that this particular feature wasn’t covered). This would allow people to see easily what type of cover was offered by a particular company in the same way that you can compare bronze, silver and gold types of software product making it easier to compare like with like without having to read the small print.

As an insurance broker, this is something that we deal with day in day out. The companies with the big marketing spend have the mantra it is all about saving money – they forget to mention that they put out “skinny” products which can leave their customers exposed to under, or no insurance. This is the true danger in DIY insurance and both Neville and Richard are spot on. Insurance is just too important to gamble with saving a few quid on – unless of course you have enough cash to self insure. Fat Sam makes a good point about “quality assurance” marks but this exists already – just use a broker. The broker will advise you what is good and what is not and at the end of the day if they get it wrong you have someone to blame, not your own milk to cry over upsetting.
Far too often we get horror tales of disappointed customers who have tried to arrange their own insurance coming back to us having had their fingers burned.
Regulations do exist to ensure that all fees are disclosed up front and are “clear, fair and not misleading” – anyone who thinks not should report the company concerned to the FSA. Ahh, but they are in “wind down” mode – but thats another story.

The FSA are a bit of a wet organisation, I am still at a loss as to what their purpose is. I think standardised types of cover will help simplify things so that people are clear not only on what is (or more importantly, what ISN’T) covered but also to the level. Currently, it’s difficult to see what isn’t covered and that can be a real issue. I keep my existing insurance to hand as a checklist when searching for new quotes.

I do use price comparison sites, but am wary of their results. In my experience, only moneysupermarket.com displayed the full excess as opposed to just displaying the voluntary excess. But most of the well-known ones were next to useless, the meerkat one asked for hardly any info, meaning that when you selected a product you had to provide sheds loads more info to the provider.

But I’m less wary of using price comparison sites than I am of using brokers. Independent? You’re having a laugh!