Question: I am a 25-year-old auditor. I work with the Rural Agricultural Development Authority (RADA). I have had a general licence since December 2004. In 2007, I was involved in an accident. Another vehicle hit my car. My claim was settled by the third party's insurers. I have a 20 per cent no-claims discount. I am planning to buy a 2008 Mitsubishi Galant for $2.35 million. I will be the sole driver. Which insurer offers the best deal?

- y3kdre@yahoo.com.

Answer: Thanks for giving me the chance to compare the coverage and prices that insurers are now offering. The Consumer Affairs Commission (CAC) carries out a similar kind of exercise in relation to basic food items, medicines and gasolene.

In theory, insurance brokers should, on a regular basis, be doing this job for their customers. Based on anecdotal evidence, the quality of this service is often below par.

I will shop around for you. You will make the decision. I also hope that other readers will use the results of my market survey to make better choices and to save money during these hard times.

SHOPPING METHOD

I sent emails to 11 of the 12 companies that were licensed as at January 31, 2009, by industry regulator, the Financial Services Commission, to transact motor insurance. Details were given to them about you under 12 separate headings.

These ranged from your age to the status of your health. Only seven of the 11 insurers (63.6 per cent) responded to my request to supply quotations. They were Advantage General (AGI), American Home (AHA), British Caribbean (BCIC), Globe Insurance (Globe), The Insurance Company of the West Indies (ICWI), Jamaica International (JIIC) and NEM Insurance (NEM).

Your former insurers were among the four that failed to reply.

The responses I got reminded me of an onion. Some insurers supplied a single layer - one page - of information. Others provided several.

One insurer also sent a specimen copy of its policy. That company correctly assumed that unlike CAC and the typical insurance consumer, price would be only one of many things that I would look at in comparing the different offers.

The seven companies that supplied quotations had combined shares of 86.5 per cent of the $10.2 billion motor-insurance market at the end of 2007.

THE SHOPPING RESULTS

Price comparisons alone do not always tell the full story. My shopping exercise demonstrates this point.

For ease of analysis, I will summarise the nine letter-sized pages of text and figures that I received from the insurers in the table below for you to study. (See Table 1).

Which of the quotations offer the best deal? The answer depends on what is important to you. I have listed only five features in the analysis.

Based on your attitude towards risks and the funds at your disposal, other factors - I call them bells and the whistles - could also play a part.

These include things like the payment of legal costs for defending charges of manslaughter, costs incurred for alternative means of transportation following an insured event, wrecker fees, personal-accident insurance for the driver and passengers, loyalty bonuses and medical expenses.

Some companies offer all of these benefits while others provide only some. To further complicate matters, the limits for these add-ons, vary between insurers. I would go for higher limits for personal injury and property damage and a lower deductible.

All of the insurers, excluding Globe, have assumed that you will not be using the vehicle for business purposes.

If you plan to do so, the premiums may have to be revised. Bear in mind also that the premiums I have listed should be discounted by 20 per cent to reflect your no-claims discount.

Surcharges for GCT (16.5 per cent) and stamp duty of $200 should be added to the resulting amount.

Insurance companies are not all created equal. There are differences between their financial strength and efficiency in settling claims. Financial strength is of particular importance these days when insurers in the United States and in the Caribbean have run into problems.

Decision-making is seldom an easy task. I hope that I have given you a tool that helps you to choose which option matches your needs.

Cedric E. Stephens provides independent information and free advice about the management of risks and insurance. Email: aegis@cwjamaica.com.