04 March 2024 , 08:35
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Some "budget-friendly" car insurance policies lack coverage for usual claims, such as a cracked windscreen.
With increased premiums, many drivers might be considering cheaper options that seem more competitive, says the consumer group Which? These less expensive basic policies might rank higher on comparison websites than pricier comprehensive plans.
However, Which? warns drivers to read the fine print because these insurance deals might have gaps which could leave them hard up if they need to make a claim. The watchdog looked at over 60 policies from 28 insurers and found that some basic plans don't cover glass damage - a common claim among drivers. This could result in drivers receiving hefty repair bills.
Rocio Concha, the Director of Policy and Advocacy at Which?, said: "You can't be on the road legally unless you have car insurance, but with premiums at eye-watering levels, many motorists are being pushed towards stripped-back policies. Concerningly, our research shows that some basic policies lack cover for common claims, meaning that a cracked windscreen could leave some drivers facing hefty repair bills they'd assumed the insurance would cover."
The average price paid for car insurance in the last quarter of 2023 was about a third, or £157 in cash terms, higher compared to the same time the previous year, according to data from the Association of British Insurers (ABI). From October 1 to December 31 2023, the average price paid for private car cover was £627, up from £470 during the same period a year earlier.
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Last week, the ABI said it was looking at different ways to tackle the rising cost of car cover. This included the industry doing more on transparency around which cars were more expensive to insure, to help people make better choices, and continuing to fight against fraud.
Longer repair times, higher repair costs, and the increasing price of replacement cars had been adding to the cost of premiums, according to insurers. The ABI also pointed out insurance premium tax (IPT) as a source of costs, saying it added £67 to the average policy. IPT is a tax on insurers which feeds into the costs customers pay.
An ABI spokesperson said: "Our members fully understand the importance of providing fair value to customers and work hard to deliver it. Our data shows that 97% of private motor insurance claims are accepted, and the average claim is over £4,000. Motor insurance is a legal requirement and each driver's circumstances will be different, so by offering a range of products, insurers are meeting customer demands and helping them stay on the road."
"Understanding what your policy includes and any excesses involved is vital and our members are committed to ensuring information is presented in a way that is as straightforward as possible. When looking for motor insurance, we would always recommend shopping around to find the policy that best suits your needs."