Bouquet of products from Virgin Money
Virgin Money has been diversifying into a variety of products in the last few years and the latest product it has planned to offer in its bouquet is the sale of a car insurance product to its customers. The company has plans to introduce personal loans, deposits, credit cards and home loans as well in the next two years as per statement issued by Sir Richards.
The company had first got into the business of credit cards some five years back when it launched a low cost credit card in collaboration with Westpac and soon had about 750,000 accounts. All these customers were inherited by Westpac when the contract between Virgin Money and Westpac ended about a year back.
Virgin Money has recently entered into a 10 year contract with Citibank for rolling out credit cards with an exclusive profit sharing agreement during this period. This credit card called the Citibank-Virgin card is expected to be issued from July, 2010, which is likely to be followed by online deposit account and retail savings. These accounts will not have any branch access and are planned to be operated online or through Citibank’s call centres existing at present. The Citibank Virgin joint venture also has plans for introducing a Virgin Blue credit card that will be linked to budget airline with provisions for reward points. This card will have direct competition with Quantas-associated credit cards.
The Australian car insurance segment is highly concentrated with about 75% of the market covered by brands owned by Suncorp-Metway and IAG. The focus of the strategy of Virgin Money as regards selling car insurance products is to offer customers insurance at a much cheaper cost compared to the existing rates in the market. The company plans to offer its products at about 35 to 40% cheaper. Virgin Money was targeting a customer base in this segment of about 40000 to 50000 in about one year time. It is planning to offer insurance products that are capped for two years and thirteen months at the price of 12 for comprehensive cover chosen by customers online. The Auto & General Insurance Company, the largest insurer of South Africa, which is planning to expand into Australian market, is underwriting the Virgin Money’s car insurance offerings.
Old and low insured value cars are more prone to theft than others
According to the data for claims released by RACV Insurance, most of car thieves in Victoria are targeting cars which are insured for small amounts and those which are almost a decade old. Cars that were more than nine years old were the favourites of thieves, as they accounted for about 73 percent of car theft claims. Cars having less than $6000 insurance value accounted for more than half the claims filed with RACV. Vehicles that were less than three years old accounted for only 4.5 percent of the theft claims with the company.
Car owners are quite careful if they are driving a new car, but they become less careful when they have an older model and they think that probably the new model of the car parked next to theirs will be the easier target for theft than their car, apparently because of the high value of the new ones. But they forget that those new models would be having all kinds of anti-theft devices installed in their cars and thieves would not like taking a risk with those models.
So if you are driving an older model, you have all the more reason to be more vigilant than others when you are parking your car at train stations, shopping malls or even outside your home. Some of the older models, such as Toyota Camry, Ford Falcon and Holden Commodores were most likely target for these thieves, though a part of the reason for high theft rate of these cars is also because there are more cars of these models on the road than other models.
One of the reasons why older cars are more prone to theft is that newer cars these days are equipped with various kinds of anti-theft devices, which are most likely not installed in older cars. They were either not installed in the first place or they went out of order and then were not replaced by the owner because of high cost involved. It is also mandatory since 2001 that all the new cars have an engine immobilizers installed in them.
However, this is not the only reason why older cars are the prime target for theft. Many cars that were hot sellers when they were launched a few years ago are also soft targets for thieves because many of these old model cars in the market needed replacement parts. Parts such as catalytic converters and various engine parts of these older models are in high demand in the market and this demand drives theft of these cars so that reselling these components in the market can fetch them good price.
Insurance is legally required – Pass the message loud and clear to young motorists
Many drivers, especially those between the age group of 17 to 20 are unaware of the fact that car insurance is a legal requirement and people may be convicted if they take an uninsured car on the road. In Australia, about 230,000 people are convicted every year for taking out an uninsured car on the road, and a majority among them is the youth.
It has been found from various researches that about 10% of youth mostly drive uninsured cars. This is basically because of two reasons - the higher premium rates of car insurance for young drivers as well as ignorance of the legal requirement of cars to be insured. High rates of premiums that are charged by car insurance companies dissuade young drivers to go for it. Young drivers are mostly students and have a tight monthly budget and are not very keen on cutting their expenses for paying high car insurance premiums. Most young drivers are also unaware of the legal requirement in this regard and also about possible consequences if they get involved in an accident while driving a car that is not insured.
The Environmental Transport Association (ETA) believes that the main reason behind youth driving uninsured cars is that law is quite soft in dealing with the offenders. Although, the cops have been given the power to not only seize, but also destroy an uninsured car, but with so many vehicles being quite low in value, it does not act as a strong enough deterrent for drivers committing the offence.
It has also bee found that most of the accidents involving young drivers occur in uninsured vehicles. Because most people in this age group are students, it is necessary that they be properly educated about this legal requirement. It will be better if this could be somehow integrated into the process of issuing the driving license. Such a move will make sure that whosoever has a driving license, knows the legal provision regarding car insurance.
At times, these young drivers are taking an uninsured vehicle out on the road because they are too confident about themselves and their driving skills. Probably due to their age, they are not afraid of taking risk without thinking about the consequences that might follow. To deal with such kind of drivers, some major changes in the legal provisions are required so that some really harsh punishment could be imposed on drivers, if they are caught driving an uninsured vehicle on the road, and an even harsher punishment if they get involved in an accident while driving such a vehicle.
Pay insurance premium as you drive
The usage based policy or the pay as you drive (PAYD) policy introduced recently in Australian car insurance market is a great boon for people who are infrequent drivers spending much less time on the road driving as compared to an average person. The traditional car insurance policy basically discriminates against those drivers who drive less and are therefore involved in less car accidents as compared to those who spend more time on the drive and are naturally involved in more number of accidents. This policy basically results into low-mileage drivers subsidizing the insurance cost of high-mileage drivers.
The PAYD policy is designed for people above the age of 25 years, with provision to roll over or get a refund of the unused kilometers. Even new kilometers can be purchased to top up the existing limit without much hassle just over phone. There is a discount in the premium if no claim has been made in the first three years after taking the policy. This policy has the potential to become extremely popular among infrequent drivers, as the new policy may end up in a substantial amount of saving.
This kind of policy has been introduced in a number of countries, with some variations. In some countries, the insurance premium is determined dynamically based on current usage, day and time the vehicle is taken out on the road, etc. Some countries also have a strictly kilometer-based policy, and companies use different methodology to monitor the car. In some cases, the cover is based on simply the odometer reading of the car, while in others, the car is tracked by a GPS device fitted in the car.
This concept is beneficial to the insurance company as well, because there is a better alignment of insurance premium with actual risk as compared to the traditional policy. However, you have to be a good driver to qualify for this policy, as the premium could go quite high if you get involved in an accident. If you are a careful driver, not used to speeding unnecessarily on the highways, then it is a good option where you can have a complete control over your insurance cost during a particular year, as the less you drive, the less you pay.
How is car insurance quality determined?
While looking for an insurance policy for your car, you will come across hundreds of companies claiming to give the best policy at the minimum rate, but it is not an easy task to actually find the one that is best for you. It is often not just sufficient to look at the rates offered by different companies because they may be offering different kinds of services as per the policy terms. There are numerous parameters specified in the terms of the policy, and to ascertain which among them is the best, requires a thorough research of various insurance companies and do a comparative study of their rates and the services provided under each policy.
The rates offered by different companies differ primarily because of the plan that you choose and various options and services included in the policy in the event you are filing for a claim. Most people look for the cheapest insurance quote, but it is essential that you read the fine prints. For instance, you may want to look at the company policy if the damage to your car is caused by a household member who is not listed as a driver on the policy schedule. The cover for emergency accommodation, transport or emergency repairs when you are away from home are widely different among different policies. Companies have different claim policy if your car is used for business, or some modifications have been done in it, or if is fitted with some non-standard accessories.
Ascertaining the quality of your car insurance involves looking at so many other parameters involved in the policy, such as what happens if there is a damage to your car because of storm, flood or fire, or due to some acts of vandalism. You may want to look at whether the company provides you a hire car if your vehicle is stolen or damaged. Whether your windscreen, window glass and sun roof are also covered in the policy determines what value the insurance policy brings to you at the price that you pay for it. The quality of a car insurance policy will depend on the level of risk you and your vehicle are exposed to and the risks that you would like to be covered by a policy and then evaluating the policy on these issues or parameters that you think are critical. Naturally, a policy that is found to be of best quality by a particular customer may not be of same quality if looked at by another customer.
Should you switch your car insurance provider?
There could be many reasons why you may want to switch your car insurance provider. If you are moving to a new location in another state, or if you are selling off your car and buying a new one or if you are not satisfied with the services of the insurance company, you may like to get your policy cancelled and look for some other company. Switching is not difficult as perceived by many people, and can be easily done, which may save you lot of money if you look at the annual payment you have to make for your insurance premium. Switching from one insurance company to another is not difficult, but you have to be careful about certain things because it may adversely impact your credit score , if you fail to cancel the policy and just let the policy expire. In this case, the company cancels your policy, no doubt, but it also sends a report to the credit rating agency about a missed payment, thus adversely affecting your credit score.
It pays to shop around for your car insurance policy, because there are price variations among different insurance companies at a particular place. The reasons for this variation are primarily because different companies fix a premium based on their experience with regard to claims by people in your age category in a particular location. There are price variations even in a particular location among different insurance companies based on their perception of the risk profile of a coverage group. There are different discount policies by different insurance companies, for instance if you have two different policies on two cars owned by you, there are discount provided by the company on a joint policy for both cars, or if you are a senior citizen, then there are discount in your car premium. You also get a discount if your car is going to be driven by both parents and children.
The best time to switch you car insurance policy is just before your old policy is about to renew, but you don’t really have to wait till then if you want to switch over. If you terminate your policy well before its expiry, most companies have clear-cut guidelines to return the unused premium on your policy. Sometimes, if you have a bad experience with the services provided by a particular company, it may be just sufficient to switch your policy agent rather than go in for changing the company itself, because different agents within a company could also make a lot of difference in the quality of service.
Should you pay monthly or annually for your car insurance premium
There are many insurance companies that offer a flexible payment option of annual or monthly premium payment for your car insurance. There are some companies that give you the choice of making a quarterly payment or a biannual payment. A monthly payment of premium spreads the premium cost of the car over the year. By spreading the annual insurance bill across twelve months, it becomes quite easy to pay premium while still getting all the protection you require for you and your motor vehicle.
However, with a monthly payment of premiums, you end up paying more, sometimes to the tune of 10% extra as compared to your monthly bill, because most insurance companies charge a kind of penalty if you are going to make your payment monthly spread over the next 12 months rather than annually at the beginning of the year to which the policy pertains. If your payment is on annual basis, then you also lose interest on the payment that you are making at the beginning of the insurance period as compared to the monthly payment where your money keeps on earning interest throughout the year. In most cases, there is an overall saving though if you pay annually, but for many people, the benefit of paying in easy monthly installments outweighs the saving due to annual premium. You should always keep in mind that even if there is a small saving, in the long run, a small amount of savings due to annual payment of premium may convert into a substantially large amount in a few years. For people, who are living financially lean lifestyles, a monthly payment of premium could be an effective means to make their outgo on car insurance premium a little more manageable.
Due to increased competition in the insurance companies segment, there are some companies that do not charge anything extra for monthly payments in which case, making a monthly payment could be an ideal choice. This is quite prevalent in some countries such as United Kingdom, and is being followed by some companies in Australia as well of late. Then, there are some credit card companies as well having a 0% plan for purchases for 12 months. It is always advisable to work out the implied insurance cost by calculating the extra payment made on monthly payment options and the money that you would be saving in the annual payment options before you come to a decision.
Tips to save money on your car insurance premium
Most people do not spend as much time trying to find the best insurance deals for their cars as they do on finding the best car to buy. The common perception is that getting the car insured involves a fixed payment and there is not much one can do to bring the cost of insurance down. The cost of insurance for a new car appears to be quite insignificant in comparison to the cost of the car, but most of the time people forget that insurance is a recurring cost that you pay throughout the life of the car every year unlike the fixed one time cost of the car itself, and any saving on insurance could mean substantial saving over the life span of your vehicle. Knowing some basic rules can save you a lot of money.
The first and foremost thing you must do before selecting an insuran
ce company is to do a thorough research on them as their rates vary widely. Most companies will give you a multi-car discount, so it is best to insure all your vehicles with one insurance company. There are further discounts if your home, where your car is kept is also insured. Try not to let your policy expire, because in that case you end up paying more than what you were paying before the expiry of the policy. The longer the policy term you choose, cheaper will be your insurance premium. It makes sense to drive cautiously for your own safety; it also reduces your chances of getting a speeding ticket and other moving violations, thus reducing your insurance cost.
You are unlikely to claim reimbursement in the first few years after you purchase the car if you are driving safely and do not get involved in an accident, and therefore it makes sense to raise your deductibles or the amount you will be paying when you file for claim. Thus, you save a lot by not claiming in the first few years when the insurance costs are high. Moreover, you should choose a coverage that you think is necessary, in addition to the minimum auto insurance requirement of your state.
Further discounts in the insurance amount may be claimed if your car has certain safety features installed in it. If your car is registered in the name of your teenaged son or daughter, then the insurance amount is likely to be higher. It is also advisable to keep checking the insurance rates offered by different companies at regular intervals rather than sticking to one company throughout the life of the vehicle.
The downside to use of GPS in car
With breakthrough innovations being introduced by automobile companies every year world over aimed at making cars more comfortable, safer, and more easily operated, modern cars come loaded with latest advances in automobile engineering. GPS is one such feature that is becoming quite popular these days helping in pinpointing the exact location of the vehicle in which the device is fitted as well as providing information on the best travel route to a destination based on an in-built digital map with which the device is linked.
However, every new technology that is useful has a downside, and GPS is no exception. With the use of this device in your car, what is at stake is your privacy. The details like where you traveled, what route you followed at any point of time when you took your car out of your garage go into a database that can be accessed by others without much difficulty, which you may not like. A monitor in front of your eyes with tones of information about your position and the travel route to your destination brings the possibility of the hazard of reduced concentration while driving. The more elaborate front panel the vehicle has, the less reaction time you will have left at your disposal to steer yourself safely out of a sudden difficult situation arising on the road ahead of you.
If you want to use this technology to track the location of your teenager son or daughter taking your car, then the technology can appear to be of great advantage, but a smart kid can easily ditch the car leaving it at a place within the safe zone limit placed by their parents and then cross this boundary without the knowledge of their parents. You will also have to be willing to shell out more for the vehicle as the system does not come cheap, increasing not only the base price of the car but other related expenses such as registration and insurance charges.
Low mileage used cars vs New Cars
Most people with a limited budget are faced with the dilemma of choosing between a low mileage used car and a new car, and it is one of the most important decisions they have to make that determines their level of satisfaction with the car they ultimately buy. Looking at the size of the used car market in Australia, it is quite clear that this is not an easy decision to make as more and more people are considering used cars as viable alternative to new cars. Both have their own shares of advantages and disadvantages, and these factors must be considered before you go ahead with your purchase. 
A new car losses its value very fast because of fast depreciation in the first few years. In fact, a new car looses a substantial value the moment it moves out of the showroom and therefore it make sense to go for a low mileage used car whose value reflects the true worth of the car excluding the price you pay for the only fact that it is a new product. You also have to pay less on insurance charges as it depends on the value of the car. You also get a wide choice if you are buying a used car because you can easily purchase an old model of a car that is no longer being promoted by the company as well as the used version of a high end car in your limited budget.
Still, there are certain advantages of buying a new car that you cannot overlook. A new car comes loaded with the latest gizmos and if your budget permits, you can get it custom made as per your preferences. Because of its valid warranty period, the car is secured in the first few years against any major problem arising out of some manufacturing defect resulting in less maintenance cost. Car manufacturers are constantly working on making the new models of the car more fuel efficient than earlier versions and therefore your new car is most likely going to have a cheaper running cost as compared to a used old model version. It is also much easier getting cheap finance for a new car as compared to an old car.
If you decide to go for a used low mileage car, you have to be careful about the condition of the car and you may be fooled by the aggressive marketing strategy of the seller.