• Graham Henrickson

Car Insurance - When did you last read the fine print?

Updated: Jul 8, 2019

Many policy holders are unaware until it's too late

If you have NRMA comprehensive car insurance and renewed your policy on or after Monday 6th November 2017 you are advised to check the fine print on the policy renewal documentation you received. The warning came from Sydney’s leading BMW Bodyshop where the number of long-standing clients denied their expertise grows each week. Accredited by the BMW Group for over 30 years, a recognised leader in their field and a client of my firm, Panel One discovered the NRMA had implemented new policy terms and conditions and was progressively replacing the original terms as policies where renewed.

I renewed my NRMA policy in January but had no recollection of seeing anything new. A search for the documentation followed and I was shocked to find the information I’d been given was true. The terms and conditions for my existing policy had been changed and it wasn’t a case of minor variation. What was written represented a significant shift in policy by the NRMA and effectively changed the principles that applied to the original insurance agreement.

The evidence suggests I am not alone and the majority of NRMA policy holders remain unaware of the changes and the implications. For many the knowledge has come too late. So, how can this be? The answer to this question requires a review of the circumstances surrounding the policy change, the use of the term ‘renewal’ and how it was communicated. Could it be a simple case of a lazy policy holders and a poor process or has the NRMA made a deliberate attempt to mislead?

The reason for the changes are unclear and the documentation I received from the NRMA provides no supportive argument. There is no longer any reference to Authorised Repairers and the freedom to choose your repairer has been removed as a standard policy condition. Both have been replaced by what they call NRMA Partner Repairers.

Of all the democratic freedoms and consumer rights, ‘freedom of choice’ was the most hardest fought. When it comes to car insurance, freedom to choose your own repairer is a long-standing and established principle in Australia and across the world. To the extent, that consumers no longer ask if it’s included but expect it to be. It’s a well understood and accepted option that serves to benefit the policy holder without detriment to the insurer. By removing it, the NRMA has taken what was a right and turned it into a privilege and to continue with that privilege policy holders must now pay an extra cost. Even more surprising is that the NRMA was unable to confirm what the cost would be. In my case, I was given an estimated additional cost of $22.01 per month. So, despite reducing the insured value of my car by 10% and granting a higher no-claim bonus – the NRMA increased my premium by 5%.

By forgoing ‘choice of repairer’, when you make a claim, regardless of who is at fault, you will be forced to use an NRMA Partner Repairer and only an NRMA Partner Repairer. Research indicates that ‘time off the road’ and the ‘quality of repair’ are the 2 greatest consumer concerns with car repairs. The list of NRMA Partner Repairers does not guarantee either of these concerns will be met and nor can it be used to specify one repairer to be superior over another. If so, then every BMW Accredited Bodyshop would appear on this list – but they don’t.

In truth, it’s a list of repairers that have agreed to comply to a set of requirements set down by the insurer. These requirements are quantitative and qualitative and given that every business is different, some may not be in the best interests of every repairer or their clients.

My complaint to NRMA and the request for an explanation has received no reply. They have however issued me with amended policy documents that indicates a reduction in the premium which I suspect was in response to my complaint.

The learning outcome for this is to always read the fine print and don’t allow past experience or brand perception to stop you from putting aside the time needed to do it.