Lower-profile insurance companies are pricing motor vehicle products below those of established players, and New Zealanders could be overpaying a large amount by not exploring their options. However, a significant number of complaints are launched each year due to denial of claims, and brokers say that professional advice is always recommended.
According to research by MoneyHub, premiums range significantly across various providers for vehicle insurance, with some policies charging an average of 40% more than others. MoneyHub’s senior researcher, Christopher Walsh, said that getting a quote is quick and simple, but that it is essential to shop around in order to get the best deal.
“While most policies have the same $400 excess, the annual saving in the upfront policy could be significant by getting a few quotes,” Walsh said. “We published our research to raise awareness that many Kiwis over-insure when it comes to market value. … A car loses value in time, so the price of car insurance should fall, but of course it usually doesn’t.”
However, Walsh also said that hundreds of people have their claims declined each year, and that customers must be sure to fully understand their policy and what they are covered for. Denial of payout at claim time is an ongoing concern, and a distinction should be made between ‘cheap’ and “affordable.” Brokers say it is down to the customers themselves to fully understand their policy, and that they should always seek advice if they need it.
According to ICIB CEO Grant Milne, there is no incentive for insurers to provide poor advice or product solutions, and that customers who use a broker are significantly less likely to encounter problems at claim time.
“There is a big difference for customers who deal over the phone or online with insurers, and those that take professional advice from an insurance broker,” Milne said. “We have the ability to provide the customer with options and can explain the shortfalls on some of the less expensive options. A call centre or comparison website doesn’t have the same access to different products and markets, and customers that use a broker and become disappointed in the policy response at claim time would definitely be in the minority.”