Personal Finance: Breaking Up With My Insurance Provider

I’ve known for a while now that my car insurance fees were some kind of rort. My small, reliable, low cost car is worth somewhere between $10,000 and $12,000, and I was paying $143 a month for comprehensive car insurance. $143 a month is $1,716 a year. That means I’ve been paying almost 20% of the car’s value every year to insure it, despite my little household’s perfect driving histories, low annual kilometres and a locked garage. I’m the proverbial little old lady who only drives her car once a week to the supermarket, and instead I was being charged like I’m the stereotype of an 18 year old p-plater who’s quite keen on street racing and drink driving.

My dream car! I will own one someday.

Luckily for me, my crappy car insurance company gave me a push to change policies by increasing my fees yet again. To $157 a month, which is $1,884 a year. I repeat: $1884 a year to insure a car worth $12,000 at most. Take a moment to consider how ridiculous that is. I would have to total my car every six years to make that policy worthwhile!

I’d already created a “car replacement fund” able to well and truly cover the cost of replacing the car if I was to total it, as it seems to me that any frugal girl should be preparing for the future. So what was the obvious solution? To take out a third party fire and theft policy so that I wouldn’t be screwed if I hit a Ferrari, and cancel the comprehensive car insurance.

When I called the insurance provider I’d picked as a good bet for a new policy, the very helpful customer service rep explained an amazing phenomenon to me: if your car is worth over $10,000, you can’t get covered for anything less than comprehensive car insurance because it would give you the right to sue the insurance company for under-insuring you. I asked if this was standard across the insurance industry and he told me that for some insurers the limit is only $5,000. Basically, insurance agencies and our legal system assume that you are unable to make decisions for yourself and that you don’t understand what the policy you’re taking out actually means. Otherwise how can you have the ability to successfully sue for your choice to buy a policy that doesn’t cover your car’s value in its entirety?

I was not impressed that my plan to only have a third party policy wouldn’t work. I don’t want to go without insurance at all in case I hit that Ferrari.

However, this story has a happy ending. The customer service rep was able to sell me a policy for $1,074 a year, or just under $90 a month. That’s cheaper than any of the quotes I received from other insurance providers for comprehensive car insurance. It’s not as cheap and cheerful as that third party policy would have been, but it’s an annual saving of $810. It turned out to be very good timing as I had to pay close to $800 for dental work this week. 

My actual car! Which is clearly a Beetle copycat. I love you, Micra.

Just because a service provider was the cheapest option when you last looked, doesn’t mean that’s still the case. When I first had to purchase car insurance three years ago, the provider I picked was by far the cheapest for my circumstances. Now they appear to be very overpriced compared to market standards. My circumstances have changed in that time, and maybe the insurance market has too. This doesn’t just apply for insurance: when was the last time you shopped around for an internet provider, or ran a price comparison on different mobile phone contracts?

Look at whether you really need insurance. I’m still planning to drop down to a third party policy when my car’s value is lower. A different policy may be a better fit than your current one, and if you have a very large savings fund and the value of your vehicle is low, think about what you’re gaining from having insurance coverage. Some people wouldn’t be comfortable with the thought of paying for a new car out of pocket and would rather have insurance just for peace of mind, and that’s okay too.

If you’re friendly and you ask questions, you will receive a wealth of information. The customer service rep was willing to chat to me about all kinds of insurance issues. For example, do you know that if you live in a suburb with lots of car parks (e.g. close to the central business district or a shopping centre) your insurance premiums will be higher? That’s because people are causing accidents by reversing into each other’s cars in car parks and your premium is partly based on the statistics for your suburb.

I can see clearly now the rain has gone... Wait, nope, it's just my new glasses.

When I was about twenty, years of school and uni finally took their toll on my eyes. I started getting headaches and having trouble reading the slides in lectures... Yep, I needed glasses.

I think I spent about $400 on that first pair of glasses, and I didn't even really like them all that much.

I've learnt a lot since then. Some of what I've learnt is even about buying glasses without spending a whole week's pay. That's what I'm sharing here.

Your eye tests are free.
Medicare will pay for you to have an eye test every two years. Some optometrists will waive the cost of your eye test even if medicare doesn't cover it (i.e. if you've already had a test in the last two years), because they want you to buy your frames from them.

Your employer may partially cover your costs.
This is the case for almost all public servants and a great deal of employees in the private sector. If you work at a computer, usually all you need is a note from your optometrist stating that you require glasses for screen work, and your receipts. Chat to your HR team for more information.

Your health insurance will cover more of the costs at some stores than others.
I looked into it and my health fund offers special deals at Specsavers stores. Some quick maths made it clear that this was my cheapest option. When I visited the Specsavers shop, they were more than happy to check for me exactly what my fund would cover. I chose one pair of awesome frames and one of very stylish sunglasses - $339 in total - but all I paid was $89. I cannot recommend enough that you work out where your insurance dollar counts the most.

Yes, these are actually my new glasses. Are they not beautiful?

It's almost always cheaper to have your old frames updated.
This means that optometrists try to steer you away from it (hint: they're in this business for the excellent profit margin). It costs about $100 at most optometrists to update your current glasses. If you love your frames, there's no need to adjust to a new style when you can have them remade with your new prescription. Speaking of which...

Optometrists HAVE to provide a written prescription if you ask... But they won't offer.
Without your prescription, you can't buy glasses anywhere else. This is what they want. Get your prescription and you suddenly have more options for where you buy your frames.

Don't be afraid to buy glasses online.
All you need is your prescription and your "pupillary distance" (this gets measured as part of your eye test, but you may need to ask for it specifically). I've bought several pairs online and it's always worked out well. I've used Optical4Less and despite the slightly dodgy website and not-so-great English, the glasses were great. It's an excellent site if you don't have health insurance and you need to buy glasses as cheaply as possible. The frames I bought never broke or scratched, though I admit they didn't have that designer look. I've also used SelectSpecs for designer frames. That's where I bought the Burberry frames I'm wearing right now - I tried them on in an optometrist where they would cost $450. I bought them for $149 online. Is it any wonder Australians are turning to internet shopping to save cash? Both sites provided exactly what was promised, with excellent customer service.

I spent more than I had to...
Because my job is reasonably conservative, I'm getting my current black Burberry frames updated so I can wear them to work most days and save the brilliant, colourful frames above for casual wear. I feel lucky to be able to afford this luxury - as one of my favourite heroines, Aurora Teagarden, says, having several pairs of frames is one of the best parts of being rich. For me, it's one of my favourite splurges. Even so, my new frames, new sunglasses and new lenses for my current frames will cost me... $188 ALL UP. That's still half of what I paid for that very first pair years ago. And if I'd chosen frugality over style, I could have paid nothing at all out of pocket.