Wednesday, 15 February 2012

A Change To Insurance Policy

I would like you, every single one of you that reads this to give me £200. In exchange for this money, I will guarantee that if, during the course of the next twelve months you happen to be in the extremely unlikely position of being punched in the face by a man called "David", I will give you some, all or more of the money back.

There are, however, certain rules. This offer only extends to being punched in the face by people that have "David" as their name on their birth certificate. No contractions (such as "Dave") can be included, neither can any foreign equivalents.

If an incident should occur, but it is discovered that you started the argument, there will be no payout. If it is discovered that you were in a position where it was more likely for an incident to take place (such as closing time at a bar holding a David Convention), no payout shall be awarded.

If, at the end of the twelve month period, you have not been punched in the face by a person called Dave, none of your money will be returned. However, I will offer the same guarantee for the following year at a cost of only £199.

If you refuse this offer, I will see to it that a law is passed preventing you from frequenting any place where there is a possibility of meeting somebody called "David".

Sound familiar? It is an extreme example I know, but this is exactly what insurance companies all over the world are doing every single day.

Long time readers of this blog will know that I have posted on the subject of insurance before, and know that I am somewhat against the idea of paying somebody hundreds of pounds for a "what if", and having none of the money returned in the event of the "if" never coming to fruition.

It was reported in yesterdays papers that the Prime Minister and other Cabinet members would be meeting with representatives of the insurance industry to discuss rising insurance premiums. In a time of recession, the last thing the British public want is to be in a position where they are forced by law to throw money at something that is almost always completely intangible.

Personally, I would very much welcome a change to the insurance industry, or even a change in policy regarding how insurance works and how the money is taken.

In Australia, where I currently reside, a lower grade motor insurance is rolled in with the road tax system. This method means that when you pay the tax premium to put a car on the road, a high percentage of this money will go towards a third party insurance policy. This policy does not cover the vehicle for theft or fire, but if somebody were to have an accident resulting in injury or death of themselves or a third party, the cost of medical expenses is covered by the motoring tax. If you wish to have the additional benefits of a full insurance policy, then you are able to do so by taking out a policy with an insurance company, but this is above and beyond the minimum insurance requirement. It is a system that works because so long as the road tax has been paid for the car is covered and legally allowed to use the roads. I say the car because once the car has tax, anybody with a legal drivers license can drive the car on Australian roads without the need for additional insurance. How do the authorities know that a car is insured? This is very simple. Paying for road tax is the only way in which you can have number plates put on the car. No silly bit of paper in the windscreen that the authorities have to do a close inspection on!

Another proposal that I would like to see considered, and potentially a much fairer system would be the following. Instead of lowering the insurance premiums for motorists, increase them, and by a substantial amount but with the guarantee that if you do not have an accident or make a claim during the duration of the policy, the money will either be returned in full (less any administration charges) or it will be rolled over into the next insurance term. This way it becomes more of a promise that a driver will drive carefully and do their utmost not to cause danger to other road users. As an addition to this system, I would like to see the premiums revoked from drivers that are caught speeding or drink driving, as this breaches the terms of the insurance (the terms being that the driver will do their best to not intentionally cause harm to other road users).

I will be watching with great interest as this story unfolds in the UK, and may put together a few more posts on the subject in due course.

Do you have any ideas on how to make the insurance system fairer? Have you been overcharged by an insurance company, or taken out a policy only to find that the insurance is annulled for reasons beyond your control? Why not share your thoughts in the comments section below.


  1. The only car insurance you can buy in BC, Canada is government insurance. It is quite low in cost, and if you have a good driving record it is 40% lower. Even my grandson's insurance is low, but if you are in accidents that are your fault your insurance goes up. We are very happy with the insurance here. If the government takes in too much money one year then everyone's premiums go down the next year.

  2. Thanks for the comment Belle :0)

    See, now that sounds like a system that works. Just out of interest, what sort of price range is the insurance for a good driver?

    For the first five years of my driving life, I was paying around £800 a year and never made a claim! The first claim I made was when my car was stolen, and after that, my insurance went up. Apparently it is the owners fault when the car gets stolen?!


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