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and the ‘I’m so worth it’ account); bills are being paid by direct debit or standing order and a set amount of cash is withdrawn to cover the petty household expenditure.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.
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?