VouchForMe User Case #1 — Sharing Car Insurance Deductible with Friends

Meet Peter, he’s 22, fresh out of university and has just been offered his first job as a software developer. He’s excited about starting the job, but there’s a problem. The office is an hour away from his flat, and there’s no public transport. So he can’t take the job unless he gets a car. He’s got a little money saved up, so he buys a used car for €5000. Now he can get to work, but he’s left with another problem. With no savings left, rent to pay and student debt, what if he gets into an accident? He can’t afford a massive repair bill or a new car, but he can’t risk losing his new job.

Peter realizes that he needs to take a fully comprehensive insurance plan, to ensure that repairs to his car will be covered if he makes a claim. He spends his week calling insurance companies but just can’t get a reasonable price. Even though he’s a cautious driver, the insurers only see a young, inexperienced, male driver and flag Peter as a high-risk prospect. After days of searching, the best price he’s found is €1100 a year for a fully comprehensive plan, which is way out of his price range. Frustrated, he goes back to the insurance companies, desperate for a way to get his insurance premium down.

In the end, he finds out that he can lower his premium significantly by taking a €1000 deductible, meaning that he’ll be liable for the first €1000 towards repairs and his insurance company will cover the rest. He’s offered a discount of 30% a year if he takes the deductible. Now he has two options to choose from.

A: Insurance premium without deductible — €1100/year.

B: Insurance premium with a €1000 deductible and 30% off — €770/year.

With an immediate saving of €330, option B is within Peter’s budget, but he’s worried about the deductible. He doesn’t think he’ll make a claim, but he’s not great at saving money, and his bank account is empty. If he does have an accident, he’ll struggle to cover the deductible without a loan, and he just doesn’t want to take such risk.

He tells his friends about his problem, and they introduce him to VouchForMe, an online tool, which can lower that risk and ease Peter’s financial worries. The insurance companies only looked at Peter through their algorithms and concluded that he’d be a risky prospect, but Peter’s friends and family know him best. They’ve seen him drive, they know he’s careful. So they agree to vouch. By vouching, his friends and family guarantee to cover either part of or the entire cost of the deductible, should an accident occur. So Peter is sharing the risk with his friends and family through VouchForMe.

Peter starts to build up a small network of financial endorsers. His friend Sarah vouches for €50, his Grandma offers €200, in the end, Peter has five people offering to cover a total together of €500. If Peter needs to claim for repairs of €4000, his friends and family will cover €500, Peter will pay €500, and the insurance company covers the rest.

A €500 deductible seems manageable to Peter, so he takes option B, getting 30% off his insurance premium. In the event of a claim, Peter doesn’t need to chase his friends for the deductible payment either. VouchForMe created agreements between Peter and his backers and in the event of a claim will collect the deductibles from his endorsers.

With insurance worries behind him, he can finally focus on his new job.

Until then, you can get started with VouchForMe here.

Next time we’ll meet Sarah and see how she uses VouchForMe. Next time we’ll meet Peter’s friend Sarah, who’s feeling the pressure of her deductible since losing a good job, we’ll see how she uses VouchForMe to get it down.