By Jackie Pearson
7 January 2009
|A number of new online car insurance brands have popped up recently but do your research to ensure you don’t sacrifice service and coverage for a cheaper premium.
In addition to the long-established insurers that are household names in Australia, there are currently around a dozen ‘fresh’ brands specialising in providing online quotes and the ability to purchase, amend and renew your car insurance online.
They all promise cheap coverage by offering more comprehensive underwriting or techniques to calculate premiums more accurately.
Image by Mr. Imperial
Some sites even look low-budget and point out that they don’t spend money on things like printing fancy marketing brochures as a way of keeping your premiums low.
WHO IS BEHIND THE BRAND?
There are only around five underwriters behind the dozen online brands. Auto and General Insurance, for example, underwrites policies for Budget Direct, 1cover, 1300Insurance, 1stforwomen, Cashbank Car Insurance and Ozicare.
Just Car Insurance and Bingle are underwritten by AAMI. eCar policies are backed by “various Lloyds underwriters”. Real Insurance and PayAsYouDrive are brands for the Hollard insurance group. And Secure Motor Plus is underwritten by Vero.
The online brands are a marketing tool for the underwriters as they appeal to a more specific “niche” in the market such as women (1stforwomen) or young drivers (Just Car Insurance).
Developing policies for specific types of policyholder should enable them to bring prices down.
1stforwomen, for example, claims that because women have better driving records than men their “good quality” drivers don’t have to “pay a higher premium to subsidise drivers that represent a higher risk”.
IS THE PRICE RIGHT?
There are substantial price differences between the online players so don’t assume your first online quote will deliver the cheapest deal. Online quotes for a Tarago-driving netball mum with a learner driver found the cheapest premium with Youi at $76.46 per month and the most expensive from Bingle at $354.53 per month – that’s a saving of over $3000 per year.
Some online brands make money by charging a margin on top of the base premium. Most have an additional charge if you elect to pay monthly. Brands from the same underwriter offer different prices.
WILL YOU SACRIFICE COVERAGE?
Cheap cover can come with restrictions so it is imperative to read the fine-print. Youi, for example, won’t pay a claim for damage caused by a household member who is not listed as a driver on your policy schedule.
Its cover for emergency accommodation, transport or emergency repairs if you are more than 100km from home is $100 per day up to $300 per claim, which is substantially lower than some other policies.
The No Claim discounts or ratings offered by online brands may not be as generous as those available from longer-standing operators or you may have to pay extra to protect your No Claim status.
eCar and Real Insurance have strict underwriting conditions that mean you will not qualify online for their coverage if, for example, you are attempting to insure a young driver. Real Insurance does encourage you to telephone for assistance if you are declined coverage online.
Some online brands won’t insure you online if your car is used for business, if it is modified or has non-standard accessories or if a driver has made multiple claims in the past five years.
CLICK AND COMPARE
Some major insurers are now offering further discounts on comprehensive car insurance policies and renewals if you purchase online. There are plenty of savings to take advantage of if you click and compare, so be sure to do your own comparisons or use a comparison site such as RateCity that comprehensively covers the market.