Snow tyres insurance fiasco

There was a 4-hour wait at the only shop in Aberdeen that had snow tyres yesterday. Even though I got to the shop an hour before opening, I still wasn’t first on the queue. Well, I have them now and it’s great because I’ve been having very close encounters as my car dances and swinging left and right when I get into my street. People have been asking me whether the new tyres make a difference and my answer is unequivocally YES! I feel safer and most importantly, my brakes seem to work on the highway.

Snow tyres are safer! (www.fotosa.ru, 2010)

There was one thing that bothered me though. Just before I got my snow tyres, there were emails going back and forth at work that insurance companies were saying that changing to snow tyres was a change to the “standard product” and hence it would cause your premium to go up! In fact, a colleague said his friend’s wife had got into an accident with snow tyres and her insurance wouldn’t pay because she had snow tyres on during the crash! I thought it was bizarre. Needless to say, I called my insurance company to inform them that I was buying snow tyres and (thankfully), they said it was fine. So far I know two insurance companies that don’t mind:

1. Allianz Insurance
2. The guys you get through Lloyds TSB

Please feel free to add to my list.

Another colleague even forwarded this link to confirm that it is indeed a real problem for car owners who want to get snow tyres in the UK. Snow tyres make your car SAFER in the winter, no? You are less likely to have a snow/ice related accident or have I missed something? How strange because the way I see it, these companies have an opportunity to REDUCE insurance  premiums when you get snow tyres. Even charging for “admin” like some insurers are doing, I still think is ridiculous. Ok, it may not part if their business model (Insurance is very transactional) but think about what one insurance company could achieve:

  1. Corporate Social Responsibility brownie points. Promoting safe driving because people will be more inclined to get snow tyres therefore reducing accidents in winter months.
  2. Potential sales volume increase. This is possible because although you are cutting prices, the NUMBER of people switching to insurance companies that reduce premium for snow tyres will INCREASE. Multiply volume by price, you could have REVENUE increase. Premiums can of course go back to normal in the summer.
  3. Steal market share. The insurance business is big business. It is largely an oligopolistic market i.e. few sellers, millions of buyers. So being the first on the scene is everything! It’s a fabulous opportunity to steal market share even just initially, before everyone copies you :-). But there’s a crown for being first. Customers are likely to come to you unless of course, the competitor’s counter-move is better e.g. even lower prices, cash back and whatever they think it takes to push back.

I’m sure there are more benefits of this approach but I have other things to do today. So if you know any insurance people, could you please ask them why they are increasing premiums for changing to snow tyres or refusing to pay out when an accident occurs (an accident that would have been fatal without snow tyres)? I’m intrigued.

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Comments

  1. I got snow tires last year for the first time and LOVE them. I don’t know why I didn’t do it before. I put them on this year (okay, had my husband go to a shop where they put them on for me…but that’s a longer story)… and had them on 4 days before a nasty snowstorm. All I could say was “great timing for my snow tires”. 🙂

    What about the insurance company having you standing beside your snow tires with a big smile for one of their ads? Oh, the tire company could use you too! Money to be had for them and you…go for it.

    Like

  2. Good for you on getting snow tires. I love snow tires. They make it so much easier to go up hills.

    Like

  3. TheIdiotSpeaketh says:

    That is the goofiest thing that I have heard, but not surprising….. leave it to some of the Insurance companies to figure out a way to NOT have to pay claims….even if you are doing something to help prevent accidents.

    Like

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