Travel Insurance: Useful or Not? 

posted by Odin on Dec 24, 2009

'Insurance Disclaimer' by andrew steinmetz, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License

I hate the insurance industry.  To me, it represents the ultimate form of corporate dominance over the consumer.  However, I understand that insurance as a service is needed and is here to stay, and so we have to deal with it and accept it.

Today I want to talk a little about travel insurance in particular.  Is it worth getting when traveling outside of Canada?  According to a poll mentioned in the Gazette some time ago, nearly 40% of Canadians do not purchase a policy when traveling to the United States.

I've only actually purchased travel insurance once in my many travels.  And the time I did purchase one was actually because I was required to do so, not because I thought it could be useful.  To keep a long story short, when I moved to France for work about two years ago, the French government had me buy a supplemental health insurance to cover me while I was there (the Quebec coverage was not enough).  So I went ahead and paid a little over $600 for a one-year policy.

While in France, I went to see a doctor on one occasion, where I paid him in cash.  The next day, when I called my insurer, I was told I would not be reimbursed because I was supposed to call ahead of my doctor's visit to get the reimbursement authorized.  Are you kidding me?  That kind of puts the whole "emergency" concept into question!

Apparently, I was supposed to read the fine print in the policy booklet!  To quote Jerry Seinfeld: "Have you seen the size of this thing?", or George Costanza: "Should I quit my job?"

But then you hear about the exorbitant prices for medical care in the United States, and you think to yourself "maybe it is worth insuring myself".  According to that same article from the Gazette, a one-day stay at a hospital south of our border for a broken arm for example could cost over $30k!  Of this astronomical sum, only $500 would be covered or reimbursed by our government!

Forget about traveling outside of Canada.  Even for travel within Canada, most people ignore the reality of our coverage situation.  Our provincial health insurance does not actually cover us outside of Quebec for everything, and when it does, it may not pay in full.

So, to sum up, I would say that in THEORY, travel insurance sounds like a safeguard worth purchasing.  The reality, however, is that there are so many circumstances and exceptions that can stop you from getting what was promised, that you might be better off traveling without any insurance.

Just cross your fingers, and hope nothing serious happens to you while abroad!

Auto Insurance Price Wars 

posted by Odin on Oct 01, 2009

'2000 VW Passat @ Zimbrick Middleton' by cw, licensed under the Creative Commons Attribution-Noncommercial 3.0 Unported License & 'Neuer KdoW der Feuerwehr Tübingen' by FWPIX, licensed under the Creative Commons Attribution-Noncommercial-Share Alike 3.0 Unported License

For those rare individuals out there that actually read this blog, you may recall my entry back in July about wanting to buy a new car.  Well, a couple of months later, I am the proud owner of a red 2009 Volkswagen Tiguan.  Today I want to talk a little about how I obtained an auto insurance plan for my brand-new purchase.

Just to provide a little background and context, I used to own a 1999 Volkswagen Passat that I insured with company A (not through a broker, but direct with the insurer).  This insurer covered me from 2003 to 2008, when I sold the car prior to moving temporarily to France.

During that period, my insurance premiums kept decreasing nicely over the years from $1,046 to $771 (these are annual figures, after taxes), even though I made a claim of around $1,700 in 2006.  So, obviously, after receiving such great service, before buying my new Tiguan, I first called my old insurer to get a quote.

Man was I disappointed!  They slammed me with a first quote of around $1,600!  Granted, I was asking for much more coverage, smaller deductibles, and all sorts of additional options (since I'm buying a new car now, whereas my Passat was a used acquisition).  But still, I am also now older and married, I live in Westmount and I work from home.  No way was I going to pay more than double my previous premium!

So I decided to look elsewhere.  A friend of mine recommended a broker from company B.  After giving him all of my information, he came back with a best quote of $962.  Now this was a good price, given that all the deductibles were at the minimum, the insurance was comprehensive/all-way and included all of the options maxed-out.

Just for fun, I then contacted my old insurer A again, and told him that I would like to stay with him (not really true, but I did also have my condo insured with them, meaning I would get a 10% rebate for multiple products insured), but that his price wasn't competitive at all.  So he crunched in some numbers, and came back with $1,041!  So he basically went down from around $1,600 to $1,041 for the exact same vehicle and insurance plan!

Needless to say, I still took broker B's plan, since it was still cheaper.  But the moral of the story is that you have to bargain and put these people under pressure.  Their quotes are not fixed in stone, and they have some leeway.

After poking around, I found out that insurer A couldn't go any lower because I haven't been insured in the last 30 days (which is expected, since I haven't owned a car in a little over a year).  So for them, that's almost like starting from scratch.  The insurer proposed by broker B does not have such a clause, and is able to give a good price regardless of when my last insurance plan expired.

I actually got a third quote from broker C (the one suggested by the VW dealer that sold me my Tiguan), but that one was still higher than B's.  For him, the cut-off limit was one year, but since I had sold my car just over a year ago, I was reset to zero.

The point is; each insurer has a very different method of calculating your premium, based on many variables and factors.  It is essential to therefore shop around among brokers and insurers.  I would recommend dealing with a broker rather than directly with an insurer, since most brokers represent between five and ten insurers, so at least he's doing some of the shopping for you.

Away with the Middle Man! Part 1 

posted by Odin on Apr 03, 2009

Today I want to tackle the Middle Man profession.  Middle men, or brokers/agents, are just a layer that lies between you, the consumer, and the product or service you are after.

There are several categories of middle men out there, many of which are listed on SeekOdin, such as real estate agents, insurance brokers, mortgage brokers and travel agents.  They all have one thing in common: they don’t ACTUALLY provide you with a tangible product or service, but they supposedly help you in the search process.

Now insurance and mortgage brokers, I can understand and tolerate.  What they are getting you is harder to find and not widely available to everyone on the internet for example.  Plus, they actually get you a discount since their business model relies on volume: the more they sell, the cheaper the policy, resulting in a discount that is transferred to your insurance policy or mortgage contract.

On the other hand, realtors and travel agents are becoming less useful.  Before the internet, sure, it was hard to know what properties are for sale, or what itineraries are available for a trip.  But with all the information available to us today, I do not really see the benefit of going through a broker or agent.  I am not advocating the complete eradication of these professions, but in a perfectly liberal capitalist society, where the market rules, they represent a market inefficiency that might get ironed out and see its purpose dwindle with time.

When it comes to real estate, as an individual you are either a buyer or a seller.  As a seller, your goal is to get listed on mls.ca (now realtor.ca), Canada’s Multiple Listing Service, combining all of the major agencies’ listings.  The only way to do this is to go through an agent, so you are pretty much forced to use the middle man.  You may choose to go independently, and try bytheowner.com, a growing trend, but you would be reducing significantly your potential buyer’s pool.

However, as a buyer, once you have access to mls.ca, there is no real incentive to go through an agent.  During my condo hunt a couple years ago, I actually got in touch with a few, and let me tell you, they didn’t do much at all.  I gave them my list of requirements, and everything they showed me made it seem like they never even looked at it!  In the end, I bought a condo that I actually found myself, from the Gazette’s Sunday open-house listings.

I think the future of realtors lies in reinventing themselves as more than just brokers, because once the information is open to everyone, the ‘search’ element becomes accessible to all (although it remains time consuming).  There is tons of room for derived or specialty services; some buyers want investment property, others are foreigners that don’t know the city or don’t have time to do visits, etc …  To sum up, as pure brokers for buyers, their necessity is declining.

It is just my opinion, but with time I see all middle men losing their grip on their respective markets, due to the increased proliferation and accessibility of the one thing over which they had complete control: information.