Four reasons for not automating our car and home insurance

There is a lot to be said about automating your finances and I am a great proponent of it. In fact, I can safely say that our finances are as automated as they could be – at the beginning of each month set amounts of money flow to different accounts (well, two actually: one saving and the ‘I’m so worth it’ account); bills are being paid by direct debit or standing order and a set amount of cash is withdrawn to cover the petty household expenditure. A system that is fast, efficient, gives us piece of mind and keeps our cash where it should be!

There is one exception – we will not automate our car and home insurance. Ever since we started paying in one lump sum, December is the month when John uses couple of hours of his time to compare home insurance and to make sure we are not paying for car insurance more than we should.

There are four reasons for that.

1. Ask and you shall be given

Automating your insurance can lead to paying far more than necessary and certainly far more that new customers. When you go to the same coffee bar everyday they offer you to joint their loyalty scheme, right? Insurance companies are no coffee bars! If you have been with the same insurer for a long time you are not likely to earn loyalty discount; more likely you are paying far more that the new customers.

The good news is that most insurance companies are open to negotiation – if you can really get the same insurance cheaper somewhere else, this is.

Ask with evidence and you shall be given!

2. Insurance is a competitive market

Insurance is a highly competitive market at the moment. Which is always good for the consumer. However, only well informed, intelligent consumers can take full advantage of this kind of market.

Research the prices; research the conditions; make sure that you have your ‘story’ straight. It is also important to decide from the outset how you are going to navigate this competitive market: are you going to be a butterfly and move from company to company or you will be a negotiator and use the knowledge of the market to get more favourable terms with your current insurer.

3. Bargaining power

Often, it does make sense to stay with your present insurer if this can be done whilst getting competitive rates. And by spending couple of hours every year to compare home insurance and care insurance John not only and simply looking for a new ‘service supplier’ – first and foremost he is increasing his bargaining power. Most of the time it works: after the initial ‘big win’ of reducing our home insurance by 70% while staying with the same company, we have always managed to either keep it at the same level or reduce it by a small amount.

4. Savings

Last but not least, not automating your insurance and spending some time comparing packages and providers can lead to substantial savings. Just make sure that you are not saving but getting insufficient cover.

Spending couple of hours a year comparing home insurance, researching car insurance and making a phone call or two has continued to reduce our insurance costs.

Not automating insurance is definitely paying off for us. How about you?

25 thoughts on “Four reasons for not automating our car and home insurance”

  1. The only thing we automate are the bills that never change. For example Cable. With 2 kids (as I know you know) we try to lessen our daily activities as much as possible. 

    Other than that we pay our bills when they come in or when we feel like it. ūüôā¬†

    1. @Jai: I gave a lot of thought to automating after reading the 4 hour Working week. Then again, as with most things, there are limits to this.

  2. Good points, Maria. Most of my bills are automated, but I agree that it is a good idea to always compare insurance rates and make sure you’re not paying more than new customers, especially if you’ve been loyal.

  3. So you really are psychic! ¬†Our car insurance renewal has just arrived and it is increased by over ¬£300! ¬†That’s a 23% increase.

    Are they having a laugh?

    We’ve had no claims in the 4 years we have had this car and this supplier has always been competitive. ¬†Cue some research and quotes for me!¬†

    I don’t begrudge companies making a profit, that’s why they exist – they are not benevolent societies. ¬†But . . . . . . .¬†

  4. Great advice. We just checked the competitors for one of our insurers and realized we could get the same level insurance from “household” brands for 1/2 the price. We had been so sucked in by the convenience that we hadn’t shopped around in a little while. That’s over ūüôā We promptly switched… case closed.

    1. @Roshawn: Exactly what happened to us – it was only a bit more dramatic than that and we were paying over three times more than we needed to. Interestingly, I did this with life insurance as well – we halved the cost and doubled the amount though being about fifteen years older than taking the first one. Go figure!

  5. Great advice! People fall into the trap of letting it go “one more year” and lose hundreds of dollars.¬†

  6. I only automate my internet bill. It’s the same all the time. But for car insurance..we have a¬†weird¬†system in Canada where you don’t really get to bargain and the price at one place is the same everywhere.

  7. ours is automated and confession–I haven’t shopped our rates in years. Guess, I should but we don’t pay much with our 97′ Civic. Making me consider it though. ¬†

    1. @Krant: There is a danger involved, yes. In the UK recently we had the bank computer system failure case where loads of automated payments were messed up. But…

  8. A great post.

    It’s worth remembering that the same principle applies with some other big bills. ¬†Car breakdown insurance always renews at full price and you should shop around or ask for a discount.

    If you have a fixed term gas or electricity contract you will be automatically moved onto a higher tariff if you don’t ¬†contact your supplier to check which deal is best for you.

    And auto renewal of antivirus software such as Norton is a scam.  Much cheaper to buy a product key online and manuallyrenew your subscription. 

    1. @Ethan: Thanks for reminding us all about this; I am off to start checking (though we just moved from British Gas to the Coop and are saving about ¬£100 monthly; yes really – none of this ‘I’ll attract you and than jack up the rate’ rubbish).

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