Avoid These Car-Insurance Sales Tricks!

Neil Faulkner writes about his experiences as an insurance salesman and reveals the tricks of the trade.

Some years ago I was an insurance consultant (a salesman) for a short period, before beating a hasty exit. In my brief time in the role, I learned that a broker's goal of good practice often clashes with its other goals. In fact, if the phrases `good practice' and `earn commission' were colours, they'd be orange and green.

Focusing just on car insurance, here are some of the things I learned that brokers do to part you from your money.

The hard sell

The brokers might ask `What have you budgeted?' but they're really asking `What can we get away with charging you?' They also ask `What other quotes have you had?' If you respond £400 and their best price is £350, they'll offer you insurance for £385, just beating your other quote.

Don't answer these questions.

Paying in monthly instalments

If you pay in monthly instalments, instead of up front in one go, you are often charged extortionate interest, perhaps around 30%. The broker will keep a hefty slice of this. It's far cheaper if you pay for your cover using a 0%-on-purchases credit card.

Changes to your circumstances during the policy

When you change details part way through your policy, the premium might go up or down. You might sell your vehicle and buy a new one that's less risky to insure, for example. On the broker's screen it'll pop up saying the premium has gone down by, say, £15. However, the broker might tell you that there has been no change. Meanwhile, it'll charge you £15 in admin fees to make the change, so they make a profit of £30.

We have a small consolation though: it's likely this technique has got harder for them since January 2005, when this area became more tightly regulated.

Incompetence

Sadly, many (but far from all) insurance consultants are monkeys. The problem is that it's a job that requires meticulousness, or they may pass insufficient details to the insurer. That information could have made your premium cheaper or, worse, the lack of it might make you officially uninsured!

Sadly, it's the customer who has the `duty of disclosure', so make sure you tell the broker everything that you think an insurer might possibly want to know, and get them to write it on their quote and proposal forms, so there is written evidence.

Information that is relevant to some insurers includes whether you're a homeowner (which can decrease your premium) or whether you've had a non-motoring criminal conviction (which can increase your premium, but at least you'll be properly insured). Some insurers even need to know if you've painted Go Faster Stripes on your car, as they've found you're statistically more likely to have an accident!

Motor legal expenses cover

Legal cover typically costs us £15 to £40, but it costs the insurer or broker £2 or less. Don't let them get away with this hefty mark-up. When you've got a basic quote and finished your usual negotiations, say that you'll take the policy if they throw in free legal cover. It's worth a go!

Loyalty doesn't pay

When it comes to renewal, if the premium charged by the insurer has gone down (usually because the cost of insuring that person, or people in general, has dropped that year), the broker will often write to the customer saying 'Good news! The premium has remained the same', and they'll keep the difference themselves. The more dastardly ones will even increase the premium.

Brokers can be a useful tool, particularly if your circumstances are complicated, but you can avoid all this hassle and cut out the middleman by comparing online. Visit The Motley Fool Car Insurance Service and we'll suggest a range of policies that suit your needs. You can then compare and pick the best of the bunch!

Take a look at our service and get a great quote!