MONEY COMMENT
Don't Renew That Insurance!

By Cliff D'Arcy
May 25, 2004

I'm one of those people who aren't quite sure whether they like poetry that doesn't rhyme. Take, for example, this popular saying, "April showers bring forth May... insurance renewals." [Huh? Ed.]

At least, that's how it goes in my household, where our major insurance policies all come up for renewal in May! And, despite having two young children, I do try to find some time to price-check our policies against the Best Buys. Last week, it was the turn of our home insurance cover: buildings and contents policies.

Here are my ten tips on slashing the cost of your household policies:

1. Rule One: DON'T just accept your latest renewal notice. Think of it as an invitation to shop around, not an offer to sign up for another year!
2. Shop around for buildings and contents insurance separately. It's pretty rare that a single company offers the best deal for both, even with 'combined cover' discounts.
3. Try to pay a single premium, rather than monthly direct debits. Although a few insurers offer interest-free monthly payments, others charge annual interest rates of 30%+ for the privilege!
4. Watch out for the dreaded payment protection insurance: several companies are now offering this over-priced cover on car and home insurance premiums.
5. Make sure you get quotes from a number of different sources, including a few insurance websites, direct insurers and brokers - and take advantage of discounts for applying online, being an existing customer, etc.
6. Make sure you're comparing like with like: many insurers come up with cheaper quotes by including voluntary policy excesses, typically £50 or more, which means you receive less if you're forced to make a claim.
7. Watch out for add-ons: insurers will charge extra for legal protection insurance and cover for accidental damage, personal possessions (contents away from the home), bicycles, etc. Only buy these 'bells and whistles' if you need them.
8. If you only need catastrophe cover for fire, theft and storm damage (in other words, you'll pay for minor incidents yourself), choosing the maximum voluntary excess, say, £500, could halve your premium.
9. Make certain that you're not under-insured: if you insure £30,000 of contents for just £15,000, your maximum payout would be £7,500, because you're 50% under-insured!
10. Arm yourself with several quotes before calling your existing insurer. Note down this year's premium and ask for confirmation of last year's figure. Work out the difference and, if it's gone up by more than a few percent, ask why. Doing this often leads to 'special discounts' to keep your business.

This year, I spent about 1½ hours trying to find better deals for my buildings and contents policies (I did this at work, as research for this article!). After at least a hundred online quotes, I realised that my existing insurance companies were still Best Buys, despite the following price hikes:

I asked both companies why my premiums had gone up far more than average, quoting the 1-2% average annual increases mentioned in an article I'd written in April. My buildings insurer knocked 10% off with no fuss, bringing my premium down by £15. I bought contents insurance from my existing insurer, but did so online for extra discounts. These saved me over £18, making this year's premium lower than last year's.

Hmmm, now I come to think of it, I've never been quoted a renewal premium that's been lower than the previous year's figure. I wonder if some firms have a policy of always charging existing policyholders more every year, hoping that they won't notice? Perish the thought!

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