Michael Pascoe: Lazy or loyal? Call it what you will, it’s still expensive
House, car, health and mortgage – don't be loyal or lazy, and you might save hundreds of dollars a year.
I think I conceived the term “lazy tax”. If not, I was there at its birth – the extra billions consumers pay as the penalty for not shopping around when it comes to mortgages, energy, insurance and anything else they have to pay.
Some folk found the term insulting, thus “loyalty tax” has become the more common euphemism.
But I like “lazy tax” because, well, I’m lazy. So lazy that it is three years since I last checked if I was paying it.
And, yes, I’ve just found I have indeed been paying it and was about to pay a whole lot more.
There’s nothing like an annual home and contents insurance policy renewal showing the premium has rocketed by 41.7 per cent to get a lazy columnist off his backside. That’s not a typo – 41.7 per cent. Ouch!
And, by coincidence, a 17 per cent jump in the comprehensive insurance premium for one car the day before, followed a few weeks later by a 19 per cent jump for the other.
Those sorts of numbers won’t surprise anyone who has read the fine print on their own recent insurance policy renewals. They are not the work of a single maverick insurer.
In large part, they are the bill for climate change, the price of more and worse natural disasters, as well as inflation.
And on top of the insurance hikes, we’re all copping sharp increases in our electricity and gas bills.
The obvious moral of the story is that checking for lazy tax needs to be an annual exercise, not something you can set and forget.
The less obvious lesson is that right now some hikes of that magnitude are not avoidable – despite the 17 per cent increase, that car insurance policy still turned out to be the best available – but others certainly are.
But let’s start with the near-universal price rises for energy and give a massive shout out to the government’s wonderful Energy Made Easy site.
Have a copy of your electricity and/or gas bill handy, go to the website, click on the “Energy Made Easy beta” link on the top left-hand side, follow the instructions and odds are you’ll save money. The only thing close to tricky about it is finding your “National Meter Identifier” number on the last page of your electricity bill – and that’s not really tricky.
Three years ago, after I threatened to leave, Origin had the best deal for me. Now, GloBird is promising to save me $180 a quarter on electricity and $20 a quarter on gas – $800 a year. Thank you Energy Made Easy. Thank you GloBird.
Sorting the insurance costs have not been as easy. Unlike gas and electricity, it’s harder to compare apples with apples in terms of exactly what is being insured.
The commercial comparison sites are a starting point, but don’t do all the work and are not comprehensive. For car insurance, they showed me I wasn’t getting a bad deal from GIO for one car, given the level of coverage, and they underlined something I already knew: Some insurance companies are not interested in insuring an Alfa, no matter how good your claims record might be.
But attitudes change. Three years ago, NRMA was not competitive for the Alfa, now it is, plus there was a $100 “special” discount on offer for a new policy – $250 saved.
Home and contents insurance is harder again. Industry experience shows Australians tend to be chronically underinsured when it comes to their homes, but a few years of GIO automatically increasing the cover had taken our contents to an unrealistic level.
This wasn’t a matter of changing insurer, but going through the policy to work out what was worth paying for and what was not. The result, several hundred more dollars saved.
When the “lazy tax” was born, the main issue was mortgage interest rates. It still is where the most money is to be saved – 0.25 might not sound like much, but on a $500,000 mortgage, it’s still a lazy $1250 a year.
With the RBA inflicting pain as it seeks a higher unemployment rate, every 0.25 per cent counts.
Whether you call it a lazy or loyalty tax, it doesn’t matter – you’re just a mug if you don’t apply competitive pressure on your expenses.