Omega Owners Forum
Chat Area => General Discussion Area => Topic started by: geoffr70 on 19 May 2011, 22:51:54
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Ahaaaaa! This has been touched on in another post somewhere but I have often thought this.
If you buy a mars bar from the shop, you pay the full price up front and take your goods away. A mars bar is tangible, a physical thing. You receive it all at once, therefore you pay all at once.
When you buy car insurance, should you decide to pay by monthly installments, the insurer or broker will charge you interest, normally at quite a high rate? Why is this? Insurance isn't a tangible thing. You do not receive the product/service or whatever you want to call it, all at once.
You receive the insurance cover over the space of a year (normally), therefore why is interest charged? This is wrong. Is it not better to pay over a space of time, as you receive the cover over a space of time, with 12 monthly installments being the most obvious and convenient?
Don't get me wrong I'm not a socialist 'people power against the big nasty companies'' sort of person, and I pay my insurance upfront in a onner.
What does anyone else think?
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Ahaaaaa! This has been touched on in another post somewhere but I have often thought this.
If you buy a mars bar from the shop, you pay the full price up front and take your goods away. A mars bar is tangible, a physical thing. You receive it all at once, therefore you pay all at once.
When you buy car insurance, should you decide to pay by monthly installments, the insurer or broker will charge you interest, normally at quite a high rate? Why is this? Insurance isn't a tangible thing. You do not receive the product/service or whatever you want to call it, all at once.
You receive the insurance cover over the space of a year (normally), therefore why is interest charged? This is wrong. Is it not better to pay over a space of time, as you receive the cover over a space of time, with 12 monthly installments being the most obvious and convenient?
Don't get me wrong I'm not a socialist 'people power against the big nasty companies'' sort of person, and I pay my insurance upfront in a onner.
What does anyone else think?
But you should only bite 1/52 each week so that it lasts the year.... :D and you can pay for your insurance like so, if you want to pay a load of interest... :) :)
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paying up front in a oner guarantees the money, with direct debits they can be cancelled, there might be problems getting the money, mistakes can be made - its just more of a risk to a company and more of a pain - the higher price reflects the fact theyd rather encourage you to pay up front instead :y
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this really annoyed me. Admiral were £840 upfront or with instalments it went up to £1134 !!! :-[
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paying up front in a oner guarantees the money, with direct debits they can be cancelled, there might be problems getting the money, mistakes can be made - its just more of a risk to a company and more of a pain - the higher price reflects the fact theyd rather encourage you to pay up front instead :y
That's absolute pap. Whenever a financial transaction takes place, if the option of finance is available, they would prefer you to take it. In the case of insurance, they stand to make huge profits, hence it is now covered by the consumer credit act of 1974.
When buying any item, such as a car, the seller is paid upfront by the finance company and the salesman receives a nice commision for flogging the finance.
I tried to pay cash for the wife's megane and they took half an hour rather around before they came up with a finance package that I would agree to. Anything but cash.
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this really annoyed me. Admiral were £840 upfront or with instalments it went up to £1134 !!! :-[
they did the same with my lad on his 206,but as he is 18 and still at college he had no choice but to go with it,any bloody wonder a lot of these youngsters drive with no insurance is it >:(
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The company i used to be with i paid around £450 but then they were taken over by someone else and wanted 3k! Admiral were still the cheapest. Hopefully the renewal will bring it down to 3 figures in November.
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The company i used to be with i paid around £450 but then they were taken over by someone else and wanted 3k! Admiral were still the cheapest. Hopefully the renewal will bring it down to 3 figures in November.
we had a similar problem.his last years insurance was around £580,when the renewal came this year it was £1500 >:( and thats with a years no claims
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paying up front in a oner guarantees the money, with direct debits they can be cancelled, there might be problems getting the money, mistakes can be made - its just more of a risk to a company and more of a pain - the higher price reflects the fact theyd rather encourage you to pay up front instead :y
Ah yes Banjax, I see what you're saying. We all know about people paying installments, getting their certificate and then cancelling the payments. Seems daft though as all the police do on a roadside check is ring the insurers anyway!
Although I understand where youre coming from, this is a different issue I believe. I can't see any justifiable reason why interest is charged on installments apart from money grabbing people. I edge more towards the right, and capitalism, but there are abuses of everything.
Compare it to council tax or your water bill. It's the same. What you pay for is received over the space of a year, therefore you pay over that time, well ten months, but crucially, without interest. There'd be hell on if people were charged interest on council tax or water bills, but we all seem to accept it on car insurance.
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The company i used to be with i paid around £450 but then they were taken over by someone else and wanted 3k! Admiral were still the cheapest. Hopefully the renewal will bring it down to 3 figures in November.
we had a similar problem.his last years insurance was around £580,when the renewal came this year it was £1500 >:( and thats with a years no claims
Due to all the people not bothering, I also blame immigrants not having the correct licence or cover for pushing prices up.
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paying up front in a oner guarantees the money, with direct debits they can be cancelled, there might be problems getting the money, mistakes can be made - its just more of a risk to a company and more of a pain - the higher price reflects the fact theyd rather encourage you to pay up front instead :y
That's absolute pap. Whenever a financial transaction takes place, if the option of finance is available, they would prefer you to take it. In the case of insurance, they stand to make huge profits, hence it is now covered by the consumer credit act of 1974.
When buying any item, such as a car, the seller is paid upfront by the finance company and the salesman receives a nice commision for flogging the finance.
I tried to pay cash for the wife's megane and they took half an hour rather around before they came up with a finance package that I would agree to. Anything but cash.
if you're buying insurance directly the company receives what you give it...they dont get money elsewhere, and we're not talking about finance we're talking about paying the premium upfront or by dd :o ;)
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The additional money or interest .. covers the additional "risk" the insurers are taking.
If have an accident a month after taking out the insurance you would expect the insurers to pay in full no doubt ?? You'd be pretty pisssed off if they only paid you 1/12 as thats all the premium you had paid ?? They have to cover full liability from day 1 so charge you "extra" to cover the convenience to you of spreading the cost.
Council does not have to cover all its cost on day 1. It pays its workers over the whole year, so can take your money over the whole year .. it only needs to finance each month as it comes .. same with water, gas, electric etc etc.
You are comparing lemons and oranges .. both are fruit but are different.
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The additional money or interest .. covers the additional "risk" the insurers are taking.
If have an accident a month after taking out the insurance you would expect the insurers to pay in full no doubt ?? You'd be pretty pisssed off if they only paid you 1/12 as thats all the premium you had paid ?? They have to cover full liability from day 1 so charge you "extra" to cover the convenience to you of spreading the cost.
Council does not have to cover all its cost on day 1. It pays its workers over the whole year, so can take your money over the whole year .. it only needs to finance each month as it comes .. same with water, gas, electric etc etc.
You are comparing lemons and oranges .. both are fruit but are different.
I agree with you in some respect Entwood, but there are some insurance companies who have a clause that if you make a claim you must settle the balance of your premium in full ;)
Admittedly, AFAIK, most of the big ones don't but some do
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This will only help those of you over 50, BUT ....... although Saga charge extra for paying monthly in advance, but no extra for paying 3 months in advance. So now I pay a quarter of my premium ever 3 months - best of both worlds for me anyway.
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This will only help those of you over 50, BUT ....... although Saga charge extra for paying monthly in advance, but no extra for paying 3 months in advance. So now I pay a quarter of my premium ever 3 months - best of both worlds for me anyway.
Only 28 years to go! :D :D
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I agree with you in some respect Entwood, but there are some insurance companies who have a clause that if you make a claim you must settle the balance of your premium in full ;)
Admittedly, AFAIK, most of the big ones don't but some do
That's what I would expect, TBH. You have received the full benefit of the policy by making a claim. Why shouldn't you be liable to pay the full premium?
Another way to look at it... The premium for cover paid annually is calculated on the assumption that the money arrives in the insurance companies' coffers on day 1 of the policy. That money stays there for 365 days of cover, so that's 365 days the insurance company has to invest the whole premium and make a profit out of it.
If the premium arrives in dribs and drabs over the year the insurance company has much less income from investing your premium.
The insurance company must make money out of investing your premium (in addition to the premium itself) to cover their administration costs, generate a profit for themselves and cover the possibility that you or other parties might make a claim.
If you paid your insurance by instalments, the cost wasn't greater, and you put 11/12ths of the premium in an investment on day 1, paid the rest of the instalments out of the investment when due, at the end of the year, you'd have made a profit. Wouldn't everybody do this if the insurance company didn't charge more?
So, it's hardly surprising that the insurance company calculate a higher premium on a monthly basis than an annual basis.
Whether the difference reflects the real cost to the insurance company or whether they are charging you a premium for the convenience of doing so is another matter, but it's not at all surprising nor, IMHO, a rip-off, that they do.
Kevin
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The company i used to be with i paid around £450 but then they were taken over by someone else and wanted 3k! Admiral were still the cheapest. Hopefully the renewal will bring it down to 3 figures in November.
we had a similar problem.his last years insurance was around £580,when the renewal came this year it was £1500 >:( and thats with a years no claims
Due to all the people not bothering, I also blame immigrants not having the correct licence or cover for pushing prices up.
Thats the least of their worries, its risen due to all the fraudulant claims which are on the rise every year for the past decade, not forgetting Personal Injury payouts.. :'( :'(
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that is another factor yes.
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paying up front in a oner guarantees the money, with direct debits they can be cancelled, there might be problems getting the money, mistakes can be made - its just more of a risk to a company and more of a pain - the higher price reflects the fact theyd rather encourage you to pay up front instead :y
That's absolute pap. Whenever a financial transaction takes place, if the option of finance is available, they would prefer you to take it. In the case of insurance, they stand to make huge profits, hence it is now covered by the consumer credit act of 1974.
When buying any item, such as a car, the seller is paid upfront by the finance company and the salesman receives a nice commision for flogging the finance.
I tried to pay cash for the wife's megane and they took half an hour rather around before they came up with a finance package that I would agree to. Anything but cash.
if you're buying insurance directly the company receives what you give it...they dont get money elsewhere, and we're not talking about finance we're talking about paying the premium upfront or by dd :o ;)
If you pay by monthly DD, you now receive an annual statement, which is exactly the same as your credit card statement. It tells you how much you paid each month and what the interest payment for that month was.
It also warns you about the dangers of missing payments, i.e. your credit history will be adversely affected or you may have to pay more interest.
It is, in effect, a credit agreement, just like a bank loan, and both you and the company have to treat it as such.
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simplest way of looking at it and only way.
Is just too relise the fact that all Insurance are robing bastards and you wont go wrong.
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I agree Kevin,
I know some insurance companies charge extortionate interest rates for monthly payments, but plenty don't ;) ;)
Incidentally... It appears that Admiral don't require payment up front if you make a claim :-X ::) :y
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I agree Kevin,
I know some insurance companies charge extortionate interest rates for monthly payments, but plenty don't ;) ;)
Incidentally... It appears that Admiral don't require payment up front if you make a claim :-X ::) :y
I've never heard of any reputable insurer asking for money up front if you make a claim...sounds a bit mickey mouse if you ask me :o
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I agree Kevin,
I know some insurance companies charge extortionate interest rates for monthly payments, but plenty don't ;) ;)
Incidentally... It appears that Admiral don't require payment up front if you make a claim :-X ::) :y
I've never heard of any reputable insurer asking for money up front if you make a claim...sounds a bit mickey mouse if you ask me :o
Very common... Norwich Union used to require it before they became Aviva, don't know now as I wouldn't use them if they paid me >:( ::)
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I agree Kevin,
I know some insurance companies charge extortionate interest rates for monthly payments, but plenty don't ;) ;)
Incidentally... It appears that Admiral don't require payment up front if you make a claim :-X ::) :y
I've never heard of any reputable insurer asking for money up front if you make a claim...sounds a bit mickey mouse if you ask me :o
Very common... Norwich Union used to require it before they became Aviva, don't know now as I wouldn't use them if they paid me >:( ::)
Aviva don't ask for anything.....literally :o My wife crashed her car into another last year in the snow. She rang to tell me. I rang aviva and told them. 'Where exactly was the accident?'
'Errr.....don't know...she was on her way to work, so somewhere in Sheffield.'
'OK. We'll send you a courtesy car to your home address tomorrow and take her car away for repair'.
'Thank you very much'.
At nine the next day they brought a lovely little skoda. ;D