'Comprehensive' car insurance policies no longer deliver

25 June 2008 / by Daniela Gieseler
Comprehensive car insurance used to have the meaning that everything, or at least a lot of potential dangers motorists might encounter, would be covered – but no more, analysis by the British Insurance Brokers' Association (BIBA) for Financial Mail have uncovered.

Features such as third-party liability cover for driving other cars, extended cover for trips abroad or courtesy cars, which used to be included in policies by default, have slowly but surely disappeared from a growing number of car insurance policies.

BIBA's analysts found alarming examples for cases in which the so-called comprehensive car insurance policy has been virtually stripped of its all-encompassing features, and car insurance companies make their money by making their customers pay dearly for optional extras.

The 'comprehensive' policy sold by RAC for example does not allow a policyholder to drive any other car, while features such as a courtesy car and insurance overseas are optional extras.

Hayley Parsons, chief executive of comparison site gocompare.com, explains: "The importance of comparison sites has meant it is key for insurers to get near the top of the rankings on price and they can do that by slimming down the cover."

"All the advertising is about price. It's no longer focused on providing the right financial protection for the motorist," Graeme Trudgill at BIBA agreed.

"Even if an element of cover remains, the sum insured may be reduced. Many insurers have lowered the limits for loss of items from the car, for accidental damage to the windscreen or for personal accident cover."

A number of car insurance providers such as Tesco charge for the first £75 of any windscreen claim and £350 compulsory excess for drivers aged between 21 and 24.

It might also be worth going through a broker instead of buying directly from the insurance company, the research suggests. Norwich Union, for example, no longer offers cover for driving other cars through direct sales, but keeps this feature in policies bought through brokers.

In any case it is crucial to read the small print and to ponder carefully what you really need, Mr Trudgill recommends: "Think about what features matter to you. Also, how much could you afford to pay in the event of a claim. You may find that paying slightly more than the cheapest premium actually gives you a better value option."

©Fair Investment Company Ltd