Lorna Bourke: beware car insurance rip-offs

I completely sympathise with you, I also don't appreciate insurers auto-renewing at uncompetitive prices and since I can't trust them to follow instructions, whenever I pay for insurance I use a pre-paid debit card. If they try and draw funds without my knowledge the transaction will more than likely fail since there will be insufficient funds.

I can recommend neteller.com who also provide a 'virtual credit card generator' (each card 'generated' is good for one transaction) which is particularly useful if you don't want any online vendor to hang on to your credit card details. If you 'load' the prepaid card with funds via local bank deposit and don't make any ATM withdrawls or foreign currency transactions, paying via prepaid card shouldn't cost any extra.

I took out car insurance with NatWest just over a year ago for £306, I had no accident no points on my licence and so I was expecting a slight reduction for getting another year's no claims bonus. I got a surprise when the renewal quote came through at £578, nearly double what it was a year ago. Anyway, I got on some well known comparison and cash-back web sites, no need to say I'm no longer with NatWest.

"Unfortunately this sort of thing happens all too often with insurance renewals"

Not so. I dont think you realise how outrageous Yes's behaviour has been. This sort of "theft" is not common at all and completely against their merchant services agreement. You ought to challenge Yes's "merchant services" agreement with their own bank. A merchant services agreement is the agreement that allows them to take credit card payments. Many companies will lose their facility if they abuse it and this is total abuse by Yes. Also, contact your own bank and try to "charge back" this unauthorised transaction. As you never signed for the transaction (it was done with cardholder not present) it should make this annoying process a little easier. Dont kid yourself - this is not usual as companies know they will lose their credit card facilities if they abuse them. Yes really have stolen money from you.

This happened to me with Barclays, the premium was ok but I left the following year. I hate companies who do this suggesting that it is for the benefit of the customer so that we do not miss renewals !

Customer loyalty is no more. Saga, two years ago were the best value for me, so I switched from Churchill, whose "premium creep" was making the insurance uncompetitive. This year, Saga wanted £840 - went to a comparison site and am now back with Churchill for £424, same T&Cs.

Never again will I accept a renewal quote and assume it's still a good deal - it usually isn't.

I really do like that idea of TrustyBadgers, because I feel the insurance industry is discovering the ways of the banks here. Using the power of hidden charges delivered via direct debit or card calls. If the payment had bounced, would Yes have rung up to threaten to cancel the insurance of £15, and £34? If the charges were legitimate they would have had to have done.

As for helping themselves to the additional £552, well, I am today signing up with Neteller.com.

I've started my renewal process a little early this year to avoid the last minute scramble for when my current insurer informs me that it has hiked my premium because I've had another year of claim free motoring!

What I've got so far is a premium ranging between £360 and £1147 and that's with more than 9 years no claims!!

Also watch out for the excesses..most of my quotes put in an outrageous £400 to make the initial quote look good. That's a lot to find if someone bumps you in a car park and scarpers without leaving details.

Legal cover is now an add on and protected no claims also adds quite a bit.

The sting in the in the tail is the interest if you pay monthly! Some charge up to 30% and for what? I'm pretty sure they don't borrow the money up front but could be wrong.

Be prepared for the incessant phone calls after you've completed a comparison website form. "Let's see if we can get the premium down". So you repeat all the info over the phone only to be told they can't go any lower!

Had one guy ask what my lowest quote was and when I told him it was £360 he said he could do it for £320 bearing in mind his company previously quoted £410.

So where do they get these premiums from...numbers in a hat drawn out at random and if you can reel in a sucker for a huge amount then that's nice.

As a general rule, you are likely to find comprehensive cover cheaper. Insurers tend to load premiums on Third Party and also TPFT as they see applicants as a bad risk.

I run 3 cars and 2 motorcycles and over the past 5 years I have only had one renewal premium, which was cheaper than the price comparison sites. Shop around for ALL insurance cover including buildings, contents, motor etc. It took me less than one hour ro reduce my block buy-to-let premium from £1021.00 to £581.00; that's an hourly rate in excess of £440.00. If you were offered employment on those terms, it would be hard to refuse!

I sort out my daughter's insurance and agree entirely with Lorna's comments.What a a bunch of shysters many insurance companies are!

Once again a string of allegations against insurers.

1. The insurer is not identified.

2. The broker is engaged by you to serve your best interests in dealing with the insurer.

3. Take a look at the Yes website. Doesn't fill me with confidence.

4. Employ a broker you have confidence in if you need one.

5. If the insurer is demanding additional charges for whatever reason your broker has a duty to examine these and explain them to you.

6. "Unfortunately this sort of thing happens all too often with insurance renewals of all kinds and insurers rely on policyholders’ apathy". I don't think so. You were dealing your broker, not the insurer.

7. You advised your broker not to make further credit card deductions. Simple instruction to your broker. This should be followed up vigorously.

8. Credit card deductions can be reversed by your bank.

9. Thanks Lorna for your analysis.

Re: SAGA.

If you had got back to SAGA and told them you had a better quote from a perhaps less respected organisation, they would have reduced it. They did for me, so I recommend doing this.

Totally agree with other posts, but also watch out for the excess- Volountry excess and Compulsery excess ?? you end up paying both if you claim ,not happened to me but when i got a good quote for insurance and had a £150 excess looks like thats it -wrong -compulsery excess is charged as a standard add on by all companies was told ,but chacked and not all charge it as left to your volountery choice, all that glitters is not gold,its a minefield out there.

The government is accused of massive waste, but this is the kind of thing the authorities should be protecting us from. We do not have the time or the expertise to de-mine this area before making a purchase that we are, incidentally, legally obliged to make.

Lorna, these days a number of insurance companies charge more for 3rd Party cover than for comprehensive cover, reckoning those asking for 3Rd Party cover are greater risks!

Best you all worker through a broker. It costs no more and they sort out these issues for you. Try "A plan".

Car insurance is a rip-off, full stop. Something tantamount to legalised fraud. Because it's legal requirement to have car insurance (and there's nothing wrong with that at all) it sadly means that the insurance companies can get together, like a dodgy cartel and dictate their terms to the customers. Looking at my car insurance Ts and Cs it reads as if they're doing me a favour taking my money and will only pay out in the most limited circumstances. If they were selling a product that wasn't a legal requirement, nobody would accept it.

My best quote went up from around £100 to £150 when I told them I was unemployed.

Lorna

Do shop around. The same insurance company will provide a cheaper quotation for the same insurance if you do so. I think that they work on 'apathy', but by shopping around you can do a bit of bargaining. If they ask what the lowest quotation is to date I always knock a considerable amount off that...this does seem to focus their minds and what a cheek in any case to ask such a question.

Citywire is a trusted site that advises on financial matters of all kinds.

One is concerned that a contributor was not aware of this type of card abuse and even more concerned that said contributor was unaware of how to action retribution.

I believe you owe subscribers an explanation.

For the last few years I have been with Zurich and I have always found a cheaper renewal quote on comparison sites but when I look at what is on offer they invariably offer less (EU cover, protected no claims, legal, no claims bonus etc). By the time I have added these items I am quite close to the Zurich quote. So in all of these cases are people comparing like with like?

Not common says 'Whatever 99', well it happened to me too.

Following my wife's severe and lengthy illness we went on an extended convalescence retreat in May-June. On return there was the inevitable pile of post to deal with and it took a few days before I found a credit card statement from the Halifax. Since I knew I hadn't used the card for ages I didn't really look at it. Eventually, and by chance, I saw a single charge on it for £244 from Saga. Saga said it was the renewal of our Camper Van (off-road) insurance. The original premium was £125 taken out in early June 2009. The van was only used for a few weeks in October that year and I would normally have cancelled the insurance and rd tax etc over winter but my wife's illness, plus the knock on effect of my being solely responsible for looking after my 94 year old disabled mother made it pretty low priority.

Saga had sent nothing - either electronically or in the mail about this policy. There was no cover note or explanation as to why the premium had virtually doubled (despite zero claims).

Evenually, with much protesting, they made a refund of £205 under their '14 day cool-off' rule. So what was the reason for withholding the £39. I still have little idea and have instructed Halifax to claw back that portion.

Back in 2004 Saga failed to notify that they had decided NOT to insure my car. They had not returned the £350 premium nor asked for a return of the cover note. For 7 months in total ignorance of his state of affairs the car was used uninsured. I only found out when I asked them why they had not issued a renewal notice: "Oh its not insured with us now" was the reply.

I shall never insure with Saga again I said at the time but that £125 premium tempted me. Big mistake. I use the Coop now - much nicer and even cheaper.

Here's my advice:

- Start 3-4 weeks before your renewal is due so you know how (un)competitive your renewal quote is when it arrives

- use comparison sites to get an idea of the range of quotes but beware of companies providing the cheapest quotes by reducing the level of cover requested (increased voluntary excess, no breakdown or legal cover etc)

- using the above lists as a guide, try cashback sites (eg Quidco, Greasy Palm) where insurance companies regularly offer £50-70 casback and can make dearer quotes the most competitive although you may need to wait a few months for the cashback

- consider separate breakdown cover. I recently got Green Flag Rescue for £17 as opposed to £27 when included in a Direct Line policy (the parent of Green Flag!)

- try LegalMate/AutoSure if you want legal cover (£10 for single car cover or £25 for all family needs - car and household cover). Insurance companies have been steadily increasing these add-ons over the past few years.

- tell your existing company that you will not be renewing about a week in advance if you have found a better quote (note date and time of call and name of advisor in case of any subsequent issues)

- beware financial advice from someone who thinks that telling a broker not to deduct further charges is effective. Automatic renewal is often a condition of taking out insurance - don't allow this to happen if you don't want it to (see above)

- allow your children to gain experience by advising them on how to do things for themselves. You can still provide/refund the annual premium as a gift after they have arranged their own insurance.

It can be a hassle but can save tens or even hundreds of pounds per year. It's an unfortunate fact of business that loyal cutomers help pay for the offers companies provide to attract new business. Inertia comes at a high price.

That's the society in which we live.

Shysters, thieves and con-men prosper, while ordinary, decent working folk are told to work harder for longer hours, and wait longer for their derisory pensions.

Big Society...Big rip-off!!

I reckon that most companies are under pressure to grow profits at an unrealistic rate at a time of no growth. One way for them to increase profits is by the sort of (at best) sharp practice described above. All utilities and financial companies seem to be operating in similar ways, encouraged by light-touch 'regulation'. On the whole this will hit the disadvantaged disproportionately as they lack the nous to deal with situations which can often be quite intimidating.

In culinary terms you could describe the sequence of events that led to Lorna's demise as the ingredients of a trifle which left a bitter taste, or a punch which produced intoxication without any merryment. Whatever it was, it turned into a cocktail of disaster. Personally speaking I have learned to enjoy plain food, but in the sophisticated world we now live in, many of us have to become gourmets before we can discern that which is salutary and what is junk. Too many supposedly respectable establishments dress mutton to look like lamb. However before I digress too far I will return to the subject under discussion.

The problem can be disected into three main elements.

(1) The role a parent should play with regard to the finance of their son's/daughter's motor vehicles.

(2) The choice of car which a young person with limited income should own.

(3) Choosing a reputable insurance company.

(3.1) Selecting which policy is the most suitable for your circumstances.

(1) If you take decisions for someone else they will never learn to be independent, and what is worse they will blame you whenever something goes wrong. Make recommendations.Give them the benefit of your experience. Introduce them to people or establishments who you think could be of the most help. Give them a sum of money if you wish to, but trust them to make their own mistakes, or wise decisions as the case maybe.

(2) Which car? A young person has to decide which type of vehicle is best for them, with the main criteria being: affordability reliability, economy, comfort, and prestige. Most cars are reliable these days. You don't see many breakdowns at the side of road, so I don't think you can pick one make in preference to another as an important factor. What is important is age, milage, ownership history and insurance group.. Used cars in the super mini class with a mid-range engine are plentiful, and cheap to buy and run. Forget the street cred' Most people who think they have it are suffering from dilusions of grandeur anyway.

(3) Picking insurance from internet sites is a minefield and certainly not something I would recommend to a young person. I think the best start they could make would be to discuss their requirements one-to-one with a well established broker who has premises in their locality. The initial cost may be less competitive but it will be far easier to sort any problems. Their visable presence means that their business practices are more likely to be ethical.

(3.1) These days Insurance policies can be tailored precisely to individual requirements so it is advisable to ask for a quote for several different sets of priorities. However as has been previously mentioned, third party, fire and theft is a poor option as the perceived risk of an accident with an old car with little value is greater than with a car whose owner places a high value upon it.