Car insurance comparison sites claim to help consumers save
money – and it is true that there are some good deals out there,
that might not be spotted without the help of these comparison
sites. But, are you actually saving money on like for like products,
or are you finding cheaper products that do not actually offer
features that you need?
How Does Car Insurance Pricing Work?First, let us see how the price of car insurance is decided. The insurer looks at the age and driving record of the customer and the age and condition of the vehicle. An older, sage driver in a new, reliable car ranks highest for insurers as a good bet. Vehicles are ranked according a set of criteria that includes the ready availability of spare parts, performance ratings and safety statistics amongst many others. But, set against car rankings and individual ratings, insurers also have to turn a profit to stay in business and keep their share-holders happy. This means that the number of claims paid out to other road users must be taken into account, as must fraud.
Fraudulent ClaimsCar insurance fraud manifests in two forms. The first is direct claims to the insurer, following faked accidents in which the criminals get in front of another driver and brake abruptly. The driver behind – the victim – has no time to brake, but is generally assumed to be at fault. The criminal then claims from the victim's insurer, pocketing a tidy little profit each time. There have even been some instances where the criminal menaces the victim, demanding a cash pay-out on the spot. This still costs the insurer as the victim invariably sustains damage to the vehicle which needs to be fixed.
The other prevalent form of car insurance fraud is when drivers make inflated medical claims. Whiplash, for example, is a painful neck injury sustained when the person is jerked violently, such as during a vehicle collision. However, whiplash does not show up on x-rays or scans and diagnosis is usually made purely through patient reactions and narrative (that is, the patient says their neck hurts and that they cannot turn it without severe discomfort!) While many cases are genuine, it is almost certain that many whiplash claims are exaggerated or made up: one insurance company stated that eighty per cent of their claims were for whiplash and similar soft tissue injuries. The equivalent in France was a mere three per cent…
Each time a case of insurance fraud succeeds in working through the system undetected there is an increased cost to the company, a cost that is forwarded to the end user in the form of higher premiums.
Referral FeesFor a time, insurers were making extra money by selling on the names of clients who had accidents to injury claim lawyers. This resulted in extra claims being placed, which in turn boosted car insurance prices overall. Government has noted the sixty per cent increase in personal claims (since 2006) from road incidents, and plans to legislate blocks to referral fees, to try and prevent this cynical, symbiotic insurer-lawyer relationship from flourishing any further.
Is Car Insurance Really Cheaper?From 2006, there has been a steady increase in the number of personal injury claims made against car insurance. This is despite the fact that roads have become safer, with less accidents reported each year. Costs of insurance rose slightly, but steadily over the years until 2011, when a downward trend began. This trend lasted for three years or so, again slight increments, but steady. By the end of 2015, it was clear that car insurance costs were on the rise again and, as of the second quarter of 2016, average car insurance prices are around £100 more than at the end of the second quarter of 2015.
How To Work It OutEach individual driver, in trying to ascertain their insurance cost differential, would need to take into account their no-claims bonus, if any; their vehicle's age and reliability, their age and whether they had changed the policy to include features like courtesy cars, breakdown assistance and so on. A useful way to check, is to keep old insurance policies, with the breakdown of all the features, extras and any discounts on them – a like for like comparison of these documents can be very revealing.
In short, car insurance has not reduced because of comparison sites, but this is not to say that comparison sites are not useful. They can help alert customers to new insurers, good deals being offered and even help to ensure that customers have the right cover for their needs.
There are still good car insurance deals to be found by motorists who are prepared to take a little trouble to find them. Shopping around for the best prices by using a comparison site is a good start but beware, there are a lot of insurers whose prices are cheap but their service is, too. Sometimes it's better to pay a little bit more, secure in the knowledge that you are dealing with a reputable company which won't prove difficult to contact if you have an accident and need to put in a claim.