One of these “add ons” is Motor Legal Protection. An additional policy most people buy as a top up level of cover in addition to their motor insurance policy. Motor Legal Protection is widely sold throughout the UK with a typical premium of £30.00, yet these policies cost insurers and brokers as little as £0.50p each, yet are retailed for upwards of £30.00, so a potential mark up of 6000%! But because these are relatively small numbers at £30 each time, dealt with at the end of an insurance quote and with little proper understanding of what the product does, most people think they are better off paying for this extra, rather than tempting fate.
Why are these products only 50p each? Because they never actually pay any legal fees out as the lawyers the insurers appoint to deal with claims under the policies are told they can’t be paid by the policies. So the lawyers take the work on and get paid fees on the cases they win, but have to absorb the costs themselves when they lose. For many years these policies have been a nice gravy train for the insurance industry with huge mark up on the unit costs, but then a second stream of income when the policies act as a referral mechanism for personal injury claims and non-fault car hire referrals.
Imagine 30 million motorists paying £30 each for motor legal protection? Yes that’s £900 Million of premium income from £15m of product!
Working in the industry for 20 years, Managing Director of York-based Free Motor Legal, Lee Jones saw how the industry functioned and set about getting motorists a better deal without having to compromise on what facilities are available to them if they have a non-fault accident.
“The irony is that many of the companies my organisations appoint to help our members do the exact same function to companies that are acting under these £30 policies” said Jones. “I simply saw a free alternative way of working for the motorist, whilst still giving the same level of service and benefits they are seeing from the insurance industry, but without any need to charge them £30 a year to sell on their details”
Instead of charging any annual premium for motor legal protection, motorists can join Free Motor Legal for free, resulting in free lifetime membership and therefore repeated annual savings whilst still having complete freedom of choice for any UK motor insurer. This allows people to still hit the price comparison sites and get the best deals; they just don’t need to pay for any additional motor legal protection.
“We still earn revenue when the services providers get appointed, just like the insurers do, only we have not charged any premium or membership fee to do this” said Jones.
In times when premiums are increasing due to a tougher marketplace for insurers and the chancellor raising Insurance Premium Tax (IPT) in successive budgets, motorists have to look further for any niche savings and joining www.freemotorlegal.co.uk can offset the average IPT hike.