‘Featured’ News
‘Stealth’ Fees Earning Millions for Motor Insurance Companies
Posted 2008-04-30
Many motor insurance companies are applying the practice of some mortgage company lenders by charging excessive fees for simple administration services.
The ‘stealth’ charges include amounts of up to £25 for straightforward paperwork, which may simply involve changing the customer’s address during the insurance policy term.
In situations involving the move from an insurance related ‘safe’ area to one considered more hazardous in insurance terms, the premiums will naturally increase.
But insurance consumers are objecting to the kind of charges being levied to cover administration tasks that do not change the overall validity or terms of the insurance policy.
According to the independent price comparison website uSwitch.com, around 14million motorists a year are being hit by excessive fees for making slight alterations in their policy details.
Overall it is estimated that the ‘stealth’ fees are earning more than £330m a year for the insurance companies involved.
Amongst the worst offenders, according to the survey by uSwitch, is Budget Insurance, who are charging a set fee of £25 to alter policy details in mid-term. More Than also charge fees for simple administration services of between £15-£25, and Churchill levies a flat fee of £21. Esure and Sheilah’s wheels are reported to charge £17.50, with Tesco levying £15.75.
A spokesman for the AA reported that the organisation does not make any charge for change of address details, but will only levy fees for major changes to the policy, which may include adding a further driver and then ensuing new insurance conditions are applied.
Other organisations that do not charge for simple administrative changes to an insurance policy include Zurich, RAC Direct and swiftcare.com.
A Budget spokeswoman confirmed that customers are made aware of any additional administrative charges in the original insurance documents, stating that these fees were in line with many competitors.
Offering a warning to drivers to consider administration fees when choosing an insurer, Debra Williams, managing director of the confused.com website, commented: “We recommend the terms and conditions of the insurance policy should be checked so that people are aware of these costs for making amendments.
Ms Williams also considers that the high charges for simple administration tasks could lead to policyholders not being completely honest and open about changes in circumstances, and that this could lead to later problems when claims are being considered.
In the present financial climate such considerations are bound to affect consumers’ choice when it comes to selecting car and van insurance, with many already reeling under the additional weight of mortgage rate rises and the tougher terms being imposed by unsecured and secured loans providers, as the credit crunch begins to impact on the once unshakeable property investment market.
It is therefore unsurprising that in search of alternative viable debt solutions, increasing numbers of homeowners and secured loan borrowers are now turning to debt management companies and requesting Debt Management Plans (DMPs) and Individual Voluntary Arrangements (IVAs).
Through these options many debt-harassed consumers are able to request creditors to accept lower payments, freeze interest rates and, in many cases, waive administration charges. For many at the moment, it is the only way they are able to reduce the monthly cost of outstanding secured and unsecured debts. The Debt Management Programme (DMP) operates by allowing money to be freed up in order to settle outstanding mortgage or other debt payments and gives the consumer the opportunity to begin clearing arrears, which may have accrued in the meantime.
Taking on a Debt Management Programme can also give the debtor some personal breathing space, as most reputable debt management organisations take on the full responsibility for dealing with letters, phone calls and the complete negotiation and repayment terms of the outstanding indebtedness, especially helpful when multiple creditors are involved.
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Understanding Car Insurance Discounts
Posted 2008-04-24
Trying to save money wherever you can is important to us all. Car insurance should be no different. Do not assume that your agent knows everything about you and your vehicle.
Drivers should take advantage of all discounts that many providers offer, that can significantly reduce the cost of car insurance. Understanding discounts and how they can affect auto insurance premiums can help smart shoppers make better decisions about their coverage and possibly save themselves some money in the process.
Read below to identify possible discounts that could help you save on auto insurance this year. Other than discounts, there may be some other ways for you to save on your insurance premiums. We will go over several discounts that can help with your current situation.
First, there are discounts for Auto Safety features. Certain states will give you discounts for anti-lock breaks. Make sure you know if it is two or four wheel anti-lock break vehicle. Automatic seatbelts and airbags are frequently discounted on your insurance premiums. In most states, a defensive driver class discount may apply. If the principal driver usually 55 years old or older has completed an approved defensive driving class a discount could apply. Keep in mind that most states will only approve this class if it is voluntary meaning that it was not the result of a violation or infraction.
Some insurers will give you a discount for having multiple vehicles. In some cases, this will only apply if you have two or more drivers. If you have a clean driving record, meaning you do not have any tickets, accidents or suspensions in the last three years (some companies require five years) then you could be eligible for a safe driver’s discount.
Many companies will reward you with staying with the same insurance company for many years without any accidents reported. They will offer you a renewal discount. It makes sense, you have carried insurance with a company for several years, and have not had an accident, your insurance company likes you and wants to reward and keep your business. Some companies honor you with a discount if you had prior limits on your previous policy. They discount you because they understand you are a better risk.
Conversely, if you do decided to change insurers a proof of prior insurance discount may apply. Most insurers request at least 6 months of consecutive insurance from the previous insurer. If you are a full-time student who meets certain grade requirements and are unmarried and usually under 25 years of age (some states the age is 21) you could be eligible for a good student discount. If you own a home, including condominium, town home, or mobile home, which is used as a principal residence, a discount could apply. Military personnel either currently active or retired from any branch of the US military a discount could apply. If your vehicle is equipped with an anti-theft device, a discount could apply.
You could lower the cost of your insurance in other ways.
For people who own older cars, it may not be necessary or cost-effective to protect them with collision and comprehensive coverage. By comparing the book value of your vehicle and the premium that the insurer has offered, you may find that it cost as much for the insurance as it does for the vehicle. If the car is worth less than $2,000, you will probably spend more insuring it than it is worth. The whole idea of driving an older car is to save money, so why not get what is coming to you.
In addition, keep in mind that the type of vehicle you buy could greatly affect your premium. A flashy red sports car is usually going to cost more to insure than a mid sized sedan. This is also true of vehicles that are on the list of most stolen. There are many ways that policyholders can save on their insurance. Knowing more about auto policies and premiums can help consumers take advantage of less obvious discounts while ensuring that they have the appropriate protection for their vehicles. The last way to save is to assume more risk. If you chose higher deductible on your Personal Injury Protection or Comprehensive and collision coverage will lower your premium as well. The deductible is the amount of money you have to pay before your insurance company begins paying the rest.
Understanding how discounts affect your insurance rates is important to save you money.