Let’s get one thing clear. When it comes to buying insurance, comparing prices from as many different insurance companies as possible is a good thing. When you use a price comparison website, you get quick access to lots of quotes. The problem with price comparison websites is that these costs are not always what they seem.
With price comparison sites recently coming under fire, we are here to bust some myths. We outline everything you need to know about the way price comparison websites work so you can decide if using one is the right choice for you.
How does a price comparison website work?
A price comparison website does exactly what it says in the tin. It compares prices on a whole range of everyday essentials, from energy deals and broadband to insurance.
Do price comparison websites make money?
Yes. Price comparison websites are not there purely to champion the consumer and help you find the best price deal. Price comparison websites are a sales tool and are designed to make money. They do this by charging a small amount of commission, which is paid to them by the insurance company when you click through and buy.
Why have there been complaints about price comparison websites?
A 2018 Which? report uncovered some worrying statistics for anyone who has bought an insurance policy through a price comparison website. It cross-checked the information shown on the price comparison website against the actual policy details once you’ve clicked through to buy. And it found that in 6 out of 10 cases, the information was different. That means that 60% of consumers could end up with insurance that is not suitable for them. This highlights the importance of double checking the small print.
Will a price comparison website always show me the lowest price for cover?
No. This is the biggest myth that people fall for. A price comparison website will generate lots of different quotes for you. But that doesn’t mean you will be offered the cheapest price out there. That’s because not every insurance company is represented on these websites.
Don’t forget quality
We all want to get the best price for our insurance. But don’t forget about quality. Buying an insurance policy that doesn’t give you the cover you need will end up costing you more in the long run if you do need to make a claim. Consider the reason for taking out insurance in the first place – to protect you financially if something goes wrong.
Do you have special requirements?
If your insurance is anything other than standard, a price comparison website may not give you the level of cover you expect. That’s because anything out of the ordinary may require a more detailed policy. If that’s not in place, you could find yourself in for a shock if you do need to make a claim.
Some typical examples when specialist insurance may be needed:
- Listed building
- High-value contents, including art, antiques, and jewellery
- Modified cars
- Classic and sports cars
- Drivers with penalty points on their licence
Are you looking for standard home, travel, pet or car insurance?
Even if you don’t have a specialist insurance requirement, you still need to check the cover being offered to you carefully. The cheapest quotes that come up on your list may not provide the level of protection you initially specified when you filled out the form. Or it may wrongly assume something – such as that you don’t have a criminal conviction or that your home is of standard insurance. In this case, the policy may be void, and you’ll be unable to claim leaving you seriously out of pocket.
Beware of high excesses that make your insurance unaffordable
Tweaking your excess (the amount you pay if you make a claim) is a great way to lower the cost of your premium. However, you do need to take care that the excess is not so high that you would not be able to afford it. Some of the cheapest deals on price comparison websites might automatically add very high voluntary excesses to get the policy to the top of the list. If you’re using a price comparison website, make sure you check out the excess before you buy.
Watch for ‘pay monthly’ prices
Price comparison websites may try to lead you to pay monthly. That’s because the insurance companies can make more money by charging you interest compared to if you pay annually. In some cases, it can almost double what you pay. If you can afford to pay in one go, don’t fall into this trap or that great price deal will end up costing you significantly more.
How else can I shop around for the cheapest insurance?
You have two other options if you want to shop around for insurance. The first is to get online or on the phone yourself and get as many quotes from different insurance companies as possible. The distinct disadvantage of this is that it will take up some time. Another negative is that you’ll need to research the best insurance companies for your needs. That’s because insurance is based on risk and different insurance companies use different factors to calculate risk. An insurance company that specialises in a specific type of cover – for example, classic car insurance – is likely to understand the unique needs of customers. And this is likely to translate into more comprehensive protection at a better price.
Your other option is to use an insurance broker. In principle using an insurance broker works a little like a price comparison website. But it comes with the benefit of dealing with an actual person rather than a computer.
- You save time as you only need to give all your details once.
- Your broker will do the leg-work for you, comparing insurance policies to find the best price.
- Because you’re dealing with a person, you can discuss your needs, so your insurance matches your needs and budget.
- They can use their expertise to tailor your policy to help you get the right level of cover at the best price with no nasty surprises in the small print.
Independent or affiliated insurance broker?
There are two different types of insurance broker. Some insurance brokers are linked to an insurance company. They can look through all the policies available from that company to find you the one most suited to your need. The other type of insurance broker is an independent insurance broker. An independent insurance broker is not tied to just one insurance company but is free to shop around the marketplace. Independent brokers know where to look for the best prices on different insurance needs and will use their expert understanding to negotiate the lowest price deal on your behalf. Look for a large independent insurance broker like Park Insurance to benefit from significant buying power, which can lead to extra discounts.
About Park Insurance
Park insurance is a family-run independent insurance broker based in Bristol. We’ve been trusted to find the best price insurance by our private and commercial customers for 30 years. We can source competitively priced insurance you can rely on for almost every situation, from car and travel insurance to health and liability cover. Call our friendly team on 0117 955 6835 or get in touch to see how much money we can save you.