Thursday 12 July 2012

The insurance deal that fails to deliver

The Post Office is currently offering a very tempting-sounding deal on home and contents insurance: “We guarantee to beat your renewal quote by at least £50.”  Sounds good, right?

I decided to try it, so I went for an online quote. But it wasn’t long before I came up against the first problem:: my occupation. I’m self-employed as a freelance copywriter. This occupation wasn’t listed on the Post Office dropdown. And I couldn’t proceed with the quote until I’d selected something from the dropdown.

I’m not a screenwriter or a signwriter. I’m not a newspaper retailer. I wasn’t any of the things decreed to be valid occupations by the dropdown list. So I was forced to give up. There was no option to skip that step, or come back to it later, or get extra help on it. I just had to give up.

Obviously, I don’t give up that easily. So I phoned them for a quote instead. When you ring the Post Office for anything to do with insurance, you are forced to listen to an insanely long recorded message. I timed it. It’s 1 minute 45 seconds. But that didn’t put me off either.

I got through to a human... and came up against the “occupation” thing again. They managed to find something on their systems that vaguely matched what I do. But then they asked if I wanted to put someone down as joint policyholder, I named my husband and the whole process started again. He’s a web developer, and they didn’t have it on their list. No, not a web designer. No, not development in the sense of international development.

The lovely Geordie lady I spoke to called in her supervisor, who decided that my husband could be put down as a “computer analyst”. “But that’s not his JOB!” I wailed. Lovely Geordie lady sympathised. I asked what the hell his job had to do with getting a home and contents insurance quote anyway, and she explained that certain jobs are higher-risk than others. Fair enough, I said, but given that we’ve established he’s not famous or notorious or bringing wild animals home at night, why can’t you just put his real job down? Because it’s not on the list. She could sympathise but not help.

My biggest concern was that I’d been told any false information could invalidate future claims, and here they were forcing me to put down a fake job for my husband. I agreed to move on with the quote when she assured me that the call was recorded and they had noted on the system that this wasn’t his actual job.

So we moved on. I was hoping they could beat my renewal quote of £199.21. But the final quote from the Post Office was a jaw-dropping £347.44. But, said the nice Geordie lady, we have this “beat your quote by £50” guarantee. So we can offer you £149.21, it’s just that terms and conditions are attached.

It goes a little something like this. They guarantee they can beat your quote by £50. And if they can’t, they will beat it anyway, because that’s what a guarantee is. But in the latter instance, you have to take out the insurance with the higher annual premium quoted and only once it’s up and running do they refund you the difference. You have to photocopy your current renewal quote and send it to them as proof, then they refund you the difference within 60 days. (This is made clear on their website).  If you’re paying monthly you have your monthly payments reduced accordingly (taking into account what you’ve already paid) and if you’re paying up front you get the difference refunded onto the card you paid with.

So... although they guarantee a cheaper quote, there can be a period of up to 60 days (and a bit of bureaucracy) between you and the savings. And in the meantime I would have to pay up a much bigger chunk of money than expected. We ran through the quote again, comparing it with my renewal quote. The Geordie lady confirmed it was a like-for-like comparison and we were entitled to get our insurance for £149.21, bureaucracy permitting.

I considered for a few hours before deciding to take out the policy, then rang back (and ignored the 1m 45s recording again). A different lady ran through my details and told me that the policy quoted for wouldn’t allow me to have a joint policyholder anyway, so all that fuss about my husband’s job was for nothing. She also explained that the £347.44 included a “monthly payment premium” which I hadn’t realised when I made the choice between paying monthly or paying up front. But hey, whatever.

Then another surprise. My first payment would be £64.14, followed by ten months at £28.33. Why was the first payment so high? Why were there only 11 months of payments? "That's just how home insurance is these days for the first year." But we get 12 months of cover, right? Of course; she seemed to think that was a very stupid question.

I asked her to clarify that they were definitely going to give me the cover for the renewal-beating £149.21 quoted originally. Yes, once they got the documents from me. A leaflet about what to do would be included in the policy details sent by post. So I paid the first instalment (which had to be paid straight away) and awaited my policy details. They came through straight away by email, with hard copies to follow by post.

Yet another surprise. My insurance policy documents included details of  a “fixed-sum loan agreement” with a creditor called BISL Limited. (Or possibly BFSL Limited; it was spelt two different ways.)
This Agreement is for a fixed sum loan to finance the cost of an insurance Policy ... The amount of credit provided under this Agreement is £256.60... The total amount payable under this Agreement  is £283.30. ..The total charge for credit is £26.70, which  consists wholly of interest. The interest rate is  10.41%. This interest is fixed for the term of this  Agreement and interest will be calculated  annually and applied monthly.

WHAT? Needless to say, this was the first I’d heard of it and I hadn’t consented to take out any kind of loan. I rang the Post Office again, ignored the 1 minute 45 seconds of recorded crap again and spoke to a completely different nice Geordie lady. She said:
  • It’s the same throughout the insurance industry: if you pay monthly, you effectively take out a loan agreement with the provider.
  • But “It’s not the same as a normal loan, like financing for a car, and it won’t affect your credit rating.”

“But why didn’t anybody explain this?” I asked. Apparently it was all explained in the 1 minute 45 seconds of recorded blurb you get when you ring up, and proceeding with the call means you’re giving your consent to this. But nobody listens to the recorded blurb! Why wasn’t I given the option at the point where I was asked how I wanted to pay? Apparently I was told. “We have a big green screen here and we have to read out all of it, so there’s no way you weren’t told.”

Basically, it was my fault for choosing to pay monthly. But, I said, paying monthly was the sensible choice because I was quoted such a huge annual sum. Well, said the lady, not to be rude, but you shouldn’t have taken out insurance with us if you can’t afford it. And if you cancel with us, you’ll have the same problem with other insurers.

No, I said, I won’t, because the other quotes I got were for smaller sums [£154.60 from Swiftcover and £156.67 from Axa], which I would be happy to pay up front. But the Post Office offered the lowest quote of all at £149.21. Hence my willingness to jump through hoops and pay more initially. Hence also my desire to pay monthly – because two twelfths of £347.44 followed by much lower payments sounded like a better bet than paying £347.44 upfront (though of course the whole payment thing didn’t quite work out like that in practice). Oh yes, she said, don’t worry about that. You will get the lower deal if that’s what we’ve quoted you.

There wasn’t much I could do. Apparently I had consented to the loan agreement, though I didn’t have any memory of doing so. Oh, and if I do cancel with the Post Office within 14 days of receiving my policy documents, I’ll have to pay an “arrangement fee” of £30. (If I cancel after 14 days, I’ll have to pay £35 plus the cost for the amount of time covered – presumably at the higher rate.) Any changes to the policy will incur an admin charge of £20, and I assume this includes changes to how I pay, so there’s no point trying to escape the monthly payment premium by coughing up the whole sum now.

Because of the hefty get-out fees, and because of the effort I’ve already expended getting the cover in place, I’ve reluctantly decided to stick with the Post Office insurance, for this year only.

The policy documents came through by post today with a cheery covering letter: “We guarantee to beat your renewal premium by at least £50 – see enclosed leaflet for details of what you need to do now...

If you’ve stayed with me through this epic tale, you won’t be surprised when I tell you that no such leaflet was enclosed. So my next task is to ring them yet again. I will be letting Restless Consumer readers know how I get on.


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