Episode 338 - On this week's show Harvey, Lauren and Andy discuss when you should consider claiming on an insurance policy and how a claim is likely to impact future renewal premiums. They look at Health, Home, Car, Pet and Travel insurance policies. Bronte joins the show to provide some money saving tips for students and finally, Laura discusses the energy crisis and what people can do if they are impacted.
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Abridged transcript - Episode 338
Andy Leeks 02:00
So we thought we'd do this piece on all different types of insurance to try and clear up when should you claim and how does it impact the renewal process and premiums? So Harvey, can you talk us through health insurance, what people need to check off to ascertain whether it's worth claiming,
Harvey Kambo 02:25
So we looked at how the renewal process works as well as the impact that claims will have on the renewal process and what we found was quite interesting. Not all insurance companies work in the same way, so that's the first thing to point out.
There are couple of things that you can check just to make sure that you've weighed things up appropriately. One is to look at what the overall cost of your private treatment might be. You can normally ask for a quote for the initial testing, consultation fees, things like that, just so that you know roughly what your private treatment might cost. Then, the next thing to do is to look at what your excess is on your policy. So if you're paying £250 on your excess and the cost of the overall treatment is £500 that might mean that the insurance company is paying £250 towards that claim and therefore you’ll have to pay the remaining £250. So if the overall amount of money that the insurance company ends up paying towards the claim is quite low, and your excess is covering maybe an equivalent amount you might be thinking is it really worth claiming, as it may impact my renewal premium and I may end up paying more next year. Perhaps in that situation it may be worth paying for the whole thing yourself and not using the insurance.
We do find that different health insurance companies work in different ways. Some allow you to buy a no claims discount protection upfront which allows you to keep your renewal premium as low as it possibly can be. The caveat being that if you end up having to claim then you'd probably lose your no claims discount and would have to wait a further year - ensuring you do not claim - before you could reinstate that no claims discount protection. There is at least one insurance company that we spoke to where they would allow you to buy back your claim. So if you were to make a claim and that claim ended up pushing up your renewal premium by more than the initial claim amount - essentially making you worse off - then at the renewal point, they will allow you to buy back your claim.
It's also worth noting that when you get to the renewal date of your policy, your premium is likely to increase anyway, irrespective of whether you have claimed. Premiums increase due to a number of factors including your age, base rate increases, the cost of healthcare and even depending on where you live.
Another thing I found quite interesting when I was looking at this was that many insurance companies offer ways of gaining discounts on your renewal premium when you go to renew your health insurance. Completing a simple Health Survey, engaging with some healthy activities, taking some health checks; all of these things could gain some discounts for you at renewal time and may help to offset some of the increase that you've suffered due to a claim.
Finally, when considering whether you want to claim against your health insurance policy, do consider whether the condition that you're going to claim for is likely to be an ongoing condition and so may be something that is likely to result in future claims. That type of condition is likely to cause a greater increase to your renewal premium than something that is perhaps a one-off and can be easily remedied.
Andy Leeks 07:03
One thing to remember is that you pay your insurance premiums for a reason. You pay it because you want to have the peace of mind and the reassurance that if you need treatment, you can seek that. I would encourage listeners to really think about that. Why did you take out the insurance in the first place? Don't put off seeing someone where your health is concerned. Another thing to think about is whether that health condition that you have is actually impacting your ability to earn money. That needs to be factored in when you're weighing up whether you should claim or not. Ok, so next we will be speaking to Lauren who will be talking about pet and travel insurance. So give us some tips first of all on pet insurance, what do you need to weigh up when it comes to pet insurance claims
Lauren Burrows 08:15
So, if you have recently taken your pet to the vet and you have had an expensive veterinary bill, you may be considering whether you should claim but before you do, there are a few things that you should consider The excess is a compulsory contribution that you have to make towards the bill when you make a claim. Some policies may have the option of zero excess but this usually means you’ll be paying a much higher premium in the first place. Understanding your excess is key, so if you had £100 excess and the bill you wanted to claim for was £300, then you’ll have to fund a third of the total cost yourself and it is extremely likely that your pet insurance premiums will rise the following year. This is because insurers assume that once you have claimed, you are more likely to claim again.
Pet insurer Animal friends says that it reviews premiums annually and it considers a range of factors including the age of your pet, where you live, the average cost of vet treatment in your area and also your personal claims history. They state that they do not offer ‘no claims bonuses’ because they do not think it is fair to those who do need to make a claim. There are however some pet insurance providers - such as Bought By Many - that claim that they will not increase your pet insurance premium due to a claim alone. Another insurer - PetPlan - says that it won't penalise you for claiming and it wants to encourage you to claim if your pet needs treatment. It states that you can expect your premium to increase at renewal, but will be largely down to the fact that your pet is another year older. It confirms that it won't simply increase your premium because you have made a claim.
It is important to understand the policy that you're taking out the first time around. I understand that it can be quite confusing when choosing a pet insurance policy and so I would encourage listeners to read some of the articles that I have written that explain the differences between the policies. It is worth remembering that if you decide to switch pet insurance providers because your insurance premium is higher than you anticipated following a claim, it is likely that the condition that you claim for will be viewed as pre-existing and so may not be covered with any other provider. Also, look out for something called a ‘co-payment’. This is usually set as a percentage and is an amount you will be expecting to pay towards the cost of the remaining bill minus the compulsory access. It is usually enforced on your policy when your dog is over the age of 8 and your cat is over the age of 10, but it can be lower if your pet is a pedigree.
Finally, do check and read your policy documents carefully for any time limits on when you have to submit a claim. Some insurers may say that you have to contact them to make a claim within say 3 months of you visiting the vet and identifying the condition. Some insurers do allow up to 12 months, however, so make sure you check before you consider making a claim. These types of policies are usually described as ‘time-limited’, meaning the cover will run out if you don’t claim within the specified time period of that particular type of policy.
Andy Leeks 13:05
Ok, so travel insurance, when should you claim and what impact does it have?
Lauren Burrows 13:48
If you are claiming for an emergency and you or someone you are travelling with has fallen ill abroad, you need to contact your travel insurance provider as soon as possible. Most insurers ask that you contact them within 48 hours of the incident happening and most will have a 24 hour claims line which you can contact them on. Most insurers have an online claims process when it comes to claiming for things like lost or stolen baggage and so make sire that you keep all of your policy documentation with you.
If you do end up claiming for personal items that have been stolen, some travel insurance providers do ask that you have report it to the police and obtain a crime reference number. Ensure that you carry your documents and certificate of insurance with you at all times Some travel insurance providers insist that you call them prior to getting any treatment, so long as it is not an emergency. They often have a set list of hospitals that they work with and so may need to refer you to the correct hospital so that you can receive your treatment. Some insurers also have certain clauses in their policies that exclude treatment at certain private hospitals, so always read the paperwork carefully before you travel.
In most cases, making a claim on your travel insurance is unlikely to impact future premiums, as incidents are usually isolated. It is extremely important that you always declare any pre-existing conditions you have, even if you think that they are minor because if you don't declare something and you need to claim, the insurer could potentially refuse to pay out. Also, if you do have to make a claim for a particular condition and then you get another insurance policy at a later date, this condition is likely to be deemed as pre-existing which most travel insurance providers are unlikely to cover. In this case, you may need to seek an insurance policy from a specialist travel insurance provider or else just accept that you won’t be covered for that condition.
Finally, be aware that you may have to see if you claim is valid elsewhere, before speaking to your insurer. For example, if your airline cancelled your trip, your travel insurance provider may ask you to contact your airline or your travel provider first, before making a claim with them.
Andy Leeks 17:42
So moving on to car insurance, what we're talking about in terms of claims is those situations where you need to get something fixed on your car and it is down to you to get it sorted. You’ll need to weigh up whether to claim through your insurance company or whether you pay for the work yourself.
Compare The Market have conducted some research that says that the average annual car insurance premium is roughly £660 pounds and a claim would put the average premium up to £844. Obviously that's a significant amount and so it is something worth bearing in mind. The research highlighted that if you were to submit a claim and you were to blame for the incident, then you would typically face a higher premium hike the following year than if it was someone else's fault. That kind of stands to reason, but interestingly, if there is a situation where both parties admit liability and insurance companies split the cost of the repairs, then you'll actually be looking at potentially a higher rise than if it was just your fault alone. So there are situations where it's not easy to ascertain what the premium rises might be if there were to be a claim.
Obviously, with car insurance there is a feature called a ‘no claims discount’ and people can pay an additional amount in order to protect the no claims discount, meaning that a claim will not lead to a rise in your premium when it comes to renewal and so you can ensure there are no nasty surprises the following year. Of course, it is always worth double checking your policy excess and find out the full cost of the repairs prior to making a claim.
Okay, so let's move on to home insurance and when should you claim? Well, if you're someone like Harvey, then of course, it's a no brainer. Unfortunately, Harvey had a house fire which resulted in a large financial loss, which she ultimately needed to claim on her insurance in order to fix and replace her house and possessions. That is, of course, a no brainer and that's why you take out insurance. We're going to talk about the balancing point between when you should and shouldn't claim. Again, we need to look at how much the excess is and while of course, we don't know what the future premiums are likely to be a making a claim, but it's something you need to have in the back of your mind.
So let's say for example, you had something in your home that got damaged beyond repair, perhaps a kids entertainment system and it was £200. We know the excess, let's say that's £100 pounds. So the difference there is £100. You've got to consider that your future premiums are likely to increase - even if you change insurance company - and that premium increase may have an impact for a number of years. Personally, if it was £200 and I had an excess of £100, I’d think twice about claiming but that's just me, obviously, you need to work out what works best for you. If you've got something that would cost several hundred pounds to replace, that's where it starts to really impact your finances and of course, that's why you take out insurance.
It is worth noting that in most cases, you won't be obliged to report every minor incident of loss or damage in your home. So if you do actually have something that happens in your home and you sort it out yourself, then you take out a home insurance policy the following year, you won't necessarily need to report that incident to your insurer. That does, however, vary from insurer to insurer and an exception to this rule is an incident that's affected the habitability or security of your property and where the damage could indirectly lead to a future claim or where a third party was involved. So to break that down, what it actually means is anything that might have impacted the structural integrity of your home, perhaps the security of your home, let's say there was a broken window or a broken lock. Even though you sorted it out yourself, you might still be asked about that and be obliged to mention that when it comes to looking at your renewal premiums, whether that is with your current insurer or a new insurer.
Finally, home insurance premiums are likely to rise year on year, whether you claim or not, so sticking with the same insurance company isn't necessarily the best idea. Always shop around. When you shop around, don’t forget that there is nothing stopping you from going back to your existing insurer and explaining that you have had a better offer elsewhere. They may be able to lower their premiums and give you an offer; you'll be surprised what they can do when you get back in touch with them and tell them that you've got a cheaper quote elsewhere.
Ok, for the next part of the pod, we're going to be welcoming Bronte back to the show.
Bronte Carvalho 23:27
So we're going to be looking at the top 10 money-saving tips for students. For a full breakdown of the top 10 money-saving tips for students read Bronte’s article or listen to the podcast from 23 minutes and 27 seconds.
Andy Leeks 34:20
For the final piece of the podcast, we're going to welcome Laura back to the show who's going to be talking about the energy crisis; what's been going on, who's been affected and for those who have been affected, what they need to do next.
Laura Mossman 34:41
So it's been a busy week in terms of energy companies where we've seen wholesale energy prices going through the roof. The government came out earlier this week to say that they were keeping the agreed price cap for this year, which has resulted in a further six energy firms folding in the last month.
So last week we saw utility point and People's Energy, joining PFP Energy and Money Plus Energy in going into bankruptcy and then this week, we've had both Green and Avro energy also folding. That's going to leave people understandably concerned about what to do if they were a customer of one of those companies and also what it means if they have built up credit in their account and whether they are able to get that money back.
Please read our article below for further information on the energy crisis or listen to the podcast section in full from 34 minutes and 41 seconds.