Richard Mason, MD, Insure Channels
Millions of motorists stick with the same insurer year after year despite the fact they could save money by switching provider.
Insurers rely on this apathy - in order to acquire new customers they have to offer loss-leading rates but they know the majority won't switch again the following year, enabling them to increase premiums and start making a profit from them.
However, the loyal customer says price isn't necessarily the most important factor: only 45% of those who had been with the same insurer put price first - compared to 71% of those who switched car insurance policies last year. Instead loyal customers emphasised the importance of the level of cover on offer (44%) and specific policy features (25%) as the primary reasons to stick with an existing policy.
If you are happy with the service your current insurer has given you, the problem with moving to a new car insurance deal is that there are no guarantees that it will be as good, even if there are financial savings to be had. And it is often not until you have a problem, or need to make a claim that service really becomes an issue, but then, it is crucially important.
There is now no need to stick with your existing provider out of concern that an alternative insurer will not offer the same level of service. Moneysupermarket.com has launched customer reviews so you can compare service as well as price.
How to know what you're getting before you buy
Moneysupermarket has already been crowned best for car insurance based on independent market research by Ipsos MORI which found that it returned the cheapest quotes on nearly twice as many profiles compared to its nearest rival in the competitive field of car insurance comparison websites.
Now however, Moneysupermarket is placing the emphasis on quality as well as price. The new customer review section allows users to rate their car insurance provider and enables those searching for a new insurer to make a better-informed decision: they can base their choice on the experience of others as well as looking for cheaper cover.
According to a recent YouGov survey, The Post Office currently holds the title of the nation's favourite insurer.
The survey rated insurers on seven criteria and The Post Office came top of the pile overall. In particular, it earned recognition for efficient claims resolution.
Diamond car insurance was earmarked for its customer service while unsurprisingly Swiftcover, which has consistently been acclaimed as the cheapest car insurer in the UK, was named as the best value for money.
In terms of overall performance, Saga came in closely behind the Post Office while Prudential, Tesco and Churchill completed the top five.
It is anticipated that the launch of this user review tool at Moneysupermarket will further encourage providers to compete both in terms of offering a competitive product and a good service. It will no longer be good enough to simply offer one of the cheaper deals - all great news for consumers.
What else should you take into consideration?
When it comes to choosing a car insurance policy, the price should still be a strong consideration. According to the Sainsbury's Car Insurance Index, premiums leapt from an average of £472.52 in December 2006 to £497.26 in December 2007 - representing a 5.24% increase in just one year.
However, you must also look beyond the cost and think about the level of cover you are receiving. Read the terms and conditions of any policy you're considering thoroughly and look out for exclusions. Here are some examples of the sort of cover options you might want to look for:
- Do you need comprehensive or third party? - For the majority of drivers, a comprehensive car insurance policy will provide the level of cover required. However, if you drive an old car that has little value a comprehensive policy is unlikely to be worth the high premium and a third party fire and theft policy should be adequate.
- No-claims discount - Will an insurer match any no-claims discount (NCD) you have built up elsewhere and how high can this discount go? Also, will your insurer allow you to place a second car on the policy that matches your existing no-claims discount? The likes of Swiftcover, Virgin, Zurich, More Than and NFU Mutual all honour no-claims discounts, while several other providers look at individual circumstances.
- No-claims protection - Is it possible to protect your discount if an accident takes place? Your premium will rise if you make a claim, but protecting your NCD could minimise the price increase as you will still get the same percentage discount as the previous year.
- Bonus accelerator schemes - Young drivers should try and build up a no-claims discount as quickly as possible to make savings. Norwich Union, for example, offers a bonus accelerator scheme with a full year's no-claims discount achieved after just nine months.
- Excess - It's important to consider how high an excess you can comfortably afford should an accident take place. Typically, an excess is set at £250 but if you are willing to pay more, your annual premium will be lower. Conversely, if you don't want to pay a £250 excess you could opt for a lower one although this will increase your overall premium.
- Policy options - Look at what is offered as standard and what you have to pay an extra premium for. Do you get a courtesy car? Will your insurance company provide you with overnight accommodation or onward travel if you are stranded in the event of an accident? Are you covered if your windscreen is chipped or if you lock your keys into the car?
- Helpline - Is your insurer contactable 24/7 and how much does it cost to use its helpline?
Remember to check out the customer review section or visit our community forum for more useful advice before you buy.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing.
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