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Research reveals risks of 'no frills' car insurance30 Nov 2011by Emma Jamieson On this site, we have long warned of the financial risks of buying excessively cheap car insurance as, in the event of an accident, considerable costs need to be met by the policyholder given their exclusion from the cover. Those buying very cheap car insurance  through
a price comparison site are particularly at risk of this effect if, as
is common, they are overly focused on reducing the cost of their policy
by as much as possible.Last year, in the context of rapidly increasing car insurance prices, the British Insurance Brokers Association, (BIBA) found that 57% of drivers reduced their level of cover when renewing their policy. Our own research confirms that consumers prioritise saving money over getting the right cover. Recent research from Sainsbury's Bank has quantified how much under-insured drivers need to pay out themselves following accidents. The total annual cost is £73m. Their survey looked at uninsured costs over the last five years, totalling £368m. These costs included the following categories: Courtesy car Over the last five years over a million drivers had to pay an average of £170.67 each or collectively £172.4m for a courtesy car in order that, following their accident, they would be able to continue with their daily activities without interruption. 61% of 'standard' car insurance policies do not provide a courtesy car. Accident transport cover 820,000 drivers over the five years they looked at had to pay for alternative transport to get to their destination following an accident, paying an average of £123 each, totalling £101 million. 60% of 'standard' car insurance policies don’t include accident transport cover. Key cover Over 660,000 motorists paid £65.8 million, on average £99.33 each, for lost or stolen car keys because their policy didn’t provide key cover. Child seat replacement Over 230,000 paid £29 million, averaging £123.94 each, for replacing child car seats after being involved in a car crash. 74% of 'standard' car insurance policies do not include child car seat replacement. Their conclusions The comments of Ben Tyte, Head of Sainsbury’s car insurance, on the implications of these findings are pertinent: "When choosing a car insurance provider it is vital motorists compare policies on a like-for-like basis; looking at price alone could have disastrous consequences. Of course, getting the most competitive price is important and we'd always urge motorists to shop around, but they need to make sure that this doesn't result in a false economy. "Those who don't compare quality of cover and instead opt for the cheapest policy may find that they don't have many benefits on their cover. Worse still, they might only discover they're not covered at the time of having a bump or losing their keys for example; it could make for a stressful and costly experience that could have been avoided." Our site's experience At car-insurance-uk-supermarket.co.uk, we see evidence of numerous motorists falling into this quality trap. We have always encouraged our site users to review one or two of the motor insurance providers that we work with directly to build in better quality cover and to pay close attention to matching their policy needs if they do prefer to compare car insurance quotes from numerous providers using a price comparison system. |
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