Though the UK economy is showing strong signs of recovery, many people are still feeling the pinch and are keen to save money. Car insurance of course represents a substantial financial outlay for all vehicle owners, particularly those with multiple vehicles, and so this is a popular area for attempting to save money.
In doing so, many people turn to the well publicised car insurance comparison sites, as they can return quotes from dozens of insurers and brokers within seconds. But do they really provide good value for money in the long run? Here we examine six hidden costs of buying car insurance from a comparison site.
1. Commission costs – When you buy car insurance, you can bet that everyone along the chain gets a cut of what you pay. Insurance comparison sites make their money by charging brokers a hefty amount of commission for each lead that they get. That commission is then built into the quote that you receive from a broker through the comparison site, so you’ll usually be able to get a more competitive deal by going direct to the broker.
2. Inflated add-on prices – When you do a car insurance comparison search you’ll often find that the top results – the cheapest ones – are immediately eye-catching because they seem so low. But it’s important to remember that the quote you see is just for a basic policy, and if you want any add-ons such as breakdown cover or cover for legal expenses you may find that these are charged at much higher rates. This is how some brokers and insurers can make back the money they would otherwise lose by offering such low prices.
3 Higher interest on direct debits – Many people prefer to pay for their insurance in instalments via direct debit. It’s no secret of course that you’ll end up paying more in the long term by taking this option, but the interest rates offered by brokers on direct debit payments can vary significantly. Be aware that some of those offering low quotes for policies may be charging high rates of 10-12% for paying via direct debit. If you go directly to a reputable broker meanwhile, you’ll usually find much more reasonable rates of around 5%.
4. Premium rate claims and enquiries – When you select a quote on a insurance comparison site you’ll be given a phone number for sales, and this may well be a free-phone number. But it’s worth investigating if this is also the case for their enquiries and claims lines, as these may well be premium numbers that can cost you dearly when you need to ring up multiple times when making a claim. This can really eat into any savings you make by accepting the original quote.
5. Unfavourable cancellation terms – At Park Insurance we offer all customers a pro rata refund if they cancel their car insurance policy mid-term. When going through a comparison website you may eventually find that the cancellation terms offered are far less generous.
6. Vehicle change administration fees – It is of course not at all unlikely that you may wish to change your vehicle during the time covered by your car insurance policy. There will usually be an administration cost applied for doing so, and if you haven’t checked this out before hand your wallet may be stung hard.
At Park Insurance you can get an honest and transparent quote on your car insurance, and we won’t try to confuse you with any hidden charges. Give us a call today to discuss your insurance needs.