RateCity
Big v small: which car insurance company would you choose?
When it comes to your car insurance, RateCity looks into both ends of the spectrum - the big dominant players and smaller, newer companies - and how to know which end you can trust.
August 30,2010
Turn on the television and it is sprawled with advertisements for a range of car insurance companies, big guns like NRMA, AAMI and GIO as well as smaller and lesser-known brands like Budget Direct, Youi and Bingle. They all have something to tell us, whether it is to "un-worry" (NRMA) or cheaper prices (Bingle) or find a cheaper quote or get $50 (Budget Direct). But the thing is who should we trust? While most of us are more familiar with the bigger insurers, can we really trust the smaller, not-so-familiar ones?
Who is more trustworthy?
Firstly, in order to start up an insurance company in Australia, the company needs to adhere to a range of rules and regulations such as the Australian car insurance code of practice and they also need an Australian Financial Services Licence (AFSL). So you can rest assured knowing that most car insurance companies in Australia with these licences and regulations, are safe and the chances of them closing up shop tomorrow never to be heard of again is unlikely.
Secondly, all insurance companies are backed by underwriters (or underwritten by themselves) who basically say "yay" or "nay" to claims. The majority of underwriters are big name companies that have been around for years and have a huge financial base. For instance Bingle is underwritten by AAMI, Budget Direct by A&G Insurance Services, GIO is by Suncorp Metway and AON is by GGU who are also the underwriters for St George Bank and Bendigo Bank to name a few. So if you are unsure of whether a smaller insurer is reputable or not, perhaps see who their underwriter is and who will be the one behind your claim.
Thirdly, there are some car insurers that have an obvious difference and target a specific market. For instance, the Australian Pensioners Insurance Agency (APIA) offers insurance for those older than 50 and not working full-time; Shannon's offers insurance for those with vintage and classic cars; and Just Car Insurance offers insurance is aimed at drivers younger than 25 with modified and high-performance cars.
The price difference
Lastly, and always a big draw card, is the price. There are a lot of smaller car insurance companies out there that are targeted at the budget end of the spectrum and are very competitive in price. RateCity put this strategy to the test by using the same address for a suburb in Sydney and compared the same driver profile using Bingle (one of the smaller, newer companies) with one of the larger companies, AAMI. The results showed that Bingle was $560 cheaper than AAMI.
Don't be put off by the smaller car insurers as you can see their prices and quite often their services are just as competitive and you may be pleasantly surprised by the saving. If you are in the market for car insurance, compare car insurance quotes today and find one you can trust.
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