Beware of traps when changing insurance cover

If you are not happy with the service and cover you are getting from your insurer, shop around for a policy that best meets your needs.

Consumers should, however, be aware of the pitfalls involved in changing insurers warns Gari Dombo, Managing Director of Alexander Forbes Insurance. Many insurers will do their utmost to prevent clients from terminating their monthly payments and moving to a competing insurer.

For example, “many insurers offer cheaper premiums for a specific period, often attracting new clients, only to return premiums to their standard rating model a few months later” warns Dombo.

Some insurers even continue to debit a clients’ account after they have changed insurers. To protect yourself against this practice, personally provide written instructions to cancel, as some insurers will ignore instructions from a new broker or insurer.

Most consumers change insurers because they have been offered a cheaper premium elsewhere. Yet it makes far more sense to change your insurer for better quality of cover and service.

As such, policy holders need to understand the detail of the cover differences before they decide to move. “Merely paying a cheaper premium does not mean you’re getting a better deal” says Dombo.

So, before changing insurers it is essential that consumers establish:

· The new insurance provider’s reputation for service excellence. Check especially the claims paying history of your prospective insurer. Sometimes friends or other clients refer you and are able to provide first-hand experience of a company’s track record in this regard. It is important to find out.

· The termination procedure of their current cover, how long it will take, when will debits cease and when will cover terminate.

· How long the new cover will take to activate, and when the first debit will take place.

· What is covered by the new cover that wasn’t covered by the old cover, or visa versa? This is found in the small print. “The exclusion detail is very important to read as policies can vary greatly” warns Dombo.

· Who is covered? Is this stated clearly in the policy? Some policies only cover the owner-driver, others nominate other parties, some specifically exclude other parties.

· What the excess is? Some excesses are expressed as a percentage of value, while others as a percentage of loss. Some will be a flat monetary amount while others will be a percentage of value. In many cases you can buy the excess, a concept called excess buy-back.

· What the vehicle is insured for? Retail value, market value, trade in value, or a combination? “These all have very different cost and payout implications and purchasers of insurance should understand what they are buying” says Dombo.

· What the insurers’ repair philosophy is? Does the insurer believe in repairing vehicles with new parts or second hand parts? Will the insurer insist that repairs are done by manufacturer- approved repairers to avoid loss of manufacturers’ warranty?

· To what extent will you be personally liable? For example, “what are you not covered for? What are the exclusions? What are the limits of cover? Regarding liability cover look out especially for; firearms exclusion, wrongful arrest extension, and security company liability extension” explains Dombo.

Once you have established that the cover suits your needs, only then should you look at price - and only then decide if you still want to change insurers.

“Failing to understand and engage with the details of cover before changing insurers is how most people fall prey to the common traps involved in changing insurers” concludes Dombo.