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1 May 2010
(source: in-house)

Low Cost Car Insurance

To get low cost car insurance in the UK, it is most common for drivers to use a car insurance comparison site to find it. This makes sense. These one-form quote services are becoming an ever more powerful way to get the cheapest quotes as they add more and more car insurers to their panels.

Price comparison sites have revolutionised the way that the insurance industry operates. In the past, if people wanted to compare motor insurers to find a low cost car insurance quote, the best that they could do was to use a broker. The broker would check the prices of the car insurers on its panel of perhaps 20 to 40 car insurance companies and, in order to stay in business, would need to be reasonably competitive.

However, the consumer could never be sure that he was getting genuinely the best deal when finding low cost car insurance in this way, as the broker, inevitably, balanced value to the consumer against the size of his own commissions.

With price comparison sites came the need for ever more competitive pricing as these systems may check 1000s of policy prices via one quote form. This has forced brokers and insurance companies to do two things. The first of these two things, of course, is to develop ever cheaper policies to compete with rivals on price comparison sites. The second thing - which is the flip side of the first - is to pair down the cover and push up the excess of these very low cost car insurance policies in order to square the pricing mathematics, taking account of the insurance risk and potential loss adjustments in the event of a claim.

Thus, the market has been flooded with 'no frills' variants of hithertoo more inclusive and hence arguably more attractive policies in order to meet their commercial needs (to stay in business) in this new market place, a market place that is now dominated by low cost car insurance providers.

It became increasingly clear to the large car insurance providers as price comparison sites gained in popularity that unless they accepted this market trend and offered their own 'no frills' policies, that they could expect to see a reduction in their market share.

And, when you step back from this, you begin to ask the question whether price comparison sites have enhanced the process of finding low cost car insurance or, in fact, they have interfered with it in a way that leads to potential problems for the consumer.

You can certainly say that when you buy low cost car insurance through a comparison site, that you need to check over the cover very carefully. Something, if done properly, that may take you to the motor insurance companies' websites to find what you need.


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