We are always told that shopping around saves money, but I never realised how much I could save until I did a bit of mystery shopping. And, perhaps even more importantly, I learned how much money a clean credit record can save you.
I tested out two direct insurers, Dial Direct and OUTsurance. The differing quotes were staggering — OUTsurance quoted me R87 more than my current insurer, MiWay, and Dial Direct quoted me R252 less. I asked MiWay to review the details and explain to me why Dial Direct could offer me such low premiums.
The answer was surprising. Subsequent to taking out my insurance with MiWay my credit record had improved. This alone reduced my premium with MiWay by R240. That was a 30% saving or an annual saving of R2880 — all because of a clean credit record.
Not all insurers use credit risk in their ratings but, according to MiWay, “insurers employing scientific rating strategies are moving more and more towards using a client’s payment profile to predict risk as we have seen a high prevalence of dishonesty and fraudulent claims from clients with poor credit scores”.
If I had not undertaken this exercise I would be overpaying on my insurance by R240 a month.
But according to MiWay, on the anniversary of the policy they automatically reassess the client risk as if the client were taking out a new policy. If your risk profile has improved you would qualify for a lower premium.
It is definitely worth shopping around at least once a year, but make sure you are comparing like with like. Dial Direct would not provide me with a full policy document until after I had signed up. I had to go to the website to see their terms and conditions.
This is probably the same with most insurers but makes it difficult to ensure that you are getting the same value for money. The fine print definitely raised some issues which would have given me a nasty shock.
My advice is if you find a better deal elsewhere, give your existing insurance company a chance to compare the products and to explain the premiums — you may be pleasantly surprised.
Checklist for cover
Before you sign on the dotted line make sure you understand the cover. Not all insurance cover is the same. These are some of the differences between three insurers: Dial Direct, MiWay and OUTsurance.
Other driver: OUTsurance covers other drivers irrespective of how long they have had their licence, as long as they are not driving the car 90% of the time. There is also an additional excess of R1000 if a younger person has an accident. This is useful for parents whose children may want to borrow the car, but unnecessary in my case and certainly not worth an extra R327 a month.
Premium waiver: Dial Direct includes a six-month premium waiver on retrenchment or disability.
Car value: Dial Direct insured at market value whereas MiWay insured at the higher retail value. Insuring at retail value ensures you can afford to replace the vehicle with a similar make and model.
Waiting period: MiWay pays out immediately and Dial Direct has a four-week waiting period.
Hail cover: Dial Direct’s website states that hail damage is covered only if specified on your contract. Gari Dombo, managing director at Alexander Forbes Insurance, says hail damage is normally automatically included in car insurance and if not this should be made clear.
If you live in Jo’burg hail cover is a necessity.