Price comparison sites: friend or foe?
Price comparison websites have revolutionised the way we buy financial products, from car and home insurance to mortgages and credit cards. But do they always deliver on the promises they make?
The sites see themselves as consumer champions, helping us to find the best deals online, saving us time and money in the process. They are convenient and relatively straightforward to use, and they spare us from having to trawl individual company websites or making multiple phone calls.
However, can we be sure that when we search for a car or home insurance quote on one of these sites that we will actually get the best deal?
Unfortunately, the answer is no - not always. One of the reasons for this is that not all insurance companies agree to be listed on comparison websites. Aviva and Direct Line are two such high-profile examples. This means comparison sites are not able to search the whole market.
For this reason, it's best to obtain separate quotes from these insurers. It's also a good idea to use more than one comparison site, as coverage can vary and the results differ. Having narrowed your search in this way, you should then get a quote directly from your preferred provider, as they may offer the same deal even cheaper than the one quoted on the price comparison site.
This is a view supported by Which?, as a spokesperson says: "Price comparison sites claim to do all of the work for you, but we found they don't always guarantee people the best deal, or even the right one."
Several leading comparison sites claim they can help the vast majority of customers save money on their car insurance premiums. Confused.com states that this is the case for 97% of its customers, while it's 98% for customers of Gocompare.com and 99% for Moneysupermarket.com.
We put this claim to the test.
We obtained car insurance quotes from each of the six leading comparison sites for a 30-year-old man, living in south-east London and driving a standard family car.
On five of the six sites esure.com was listed as the top provider, with the cheapest quote offered by Google's motor insurance comparison service. However, even Google's quote was still £3.68 more than esure quoted our driver directly. Uswitch.com was the only one to list an alternative provider, Admiral, with the quoted premium being £93.35 more than esure's direct quote.
We also obtained quotes for home contents insurance from the same comparison sites (except Google, which does not yet compare home insurance). Our search was based on a 30-year-old woman living in a rented terraced house in Manchester. For this scenario, MoneySupermarket.com and Gocompare.com offered the cheapest quote, which was supplied by Endsleigh at £70.68.
This quote beat the one we got direct from Endsleigh, as did the quote by Confused.com. But if you'd just checked Comparethemarket.com and chosen its top result, you would have paid a slightly higher premium. Again, Uswitch.com offered an alternative 'cheapest' provider, Bradford & Bingley, but at a higher premium of £87.08.
Unfortunately, comparison sites are designed to compare and rank policies according to price. Yet, not all home or car insurance policies are of the same quality and coverage, and so comparing like for like can be difficult. Some will be fairly basic; others more comprehensive. Some will include a voluntary excess that you'll have to change (such as the £100 pre-selected by Comparethemarket.com and £250 by Confused.com), others may not.
Commenting on the use of pre-selected voluntary excesses, Gemma Stanbury, head of car insurance at Confused.com, says: "This is a widely used method of helping customers ensure they are not stung by high insurance premiums if they choose a very low excess. It is simply in place as a guide, and the excess can be manually changed by the customer - either during their application, or when viewing their quote results."
Some comparison sites feature deals that offer extra benefits, such as free home emergency or legal expenses cover. Ignoring these policy discrepancies and comparing on price alone would lead you to conclude that the best policy is the cheapest, which often isn't the case.
An important problem with using comparison sites is they tend to rely on pre-ticked boxes and will make various assumptions, in order to speed up the quoting process. If a customer misses one of these boxes and, due to this omission, provides inaccurate information, they risk a future insurance claim being rejected.
For example, you might not have five-lever locks fitted on all exterior doors. If this is pre-selected and you fail to correct it, you may end up with a cheaper home insurance quote but, in the event of a fire, you'd risk having your claim turned down.
Uswitch told us: "Any pre-selected values on our website are designed to help speed up the customer's journey. They are clearly visible and can easily be de-selected if the customer chooses to do so."
For most of us, price comparison sites offer a handy starting point when we're looking for a relatively straightforward insurance quote. However, what if your specific requirements fall outside of the norm - for example, if you have a driving conviction, a claims record or a medical condition?
Often these issues are covered in the assumptions, either displayed as a standard list or a selection of pre-ticked boxes. The problem is that if your circumstances are not standard, some of these assumptions might be irrelevant - yet it can be impossible to get a quote if you don't agree with them.
Graeme Trudgill, director of the British Insurance Brokers' Association, says: "Comparison sites should provide customers with a full 'demands and needs' statement and ensure they are absolutely clear on the important facts, significant exclusions and what is and is not covered."
Jackie Spencer of the Money Advice Service also believes customers should take care when using comparison sites. She says: "Remember that the cheapest product may not always be the right product for your needs; be aware of the difference between a best-buy table and a whole-of-market search."
This is more usually a feature of car insurance but it can also crop up in contents, mobile phone and pet insurance policies. An excess is the amount of money you have to pay before the insurance company starts paying out. The excess makes up the first part of a claim, so if your excess is £100 and your claim is for £500, you would pay the first £100 and the insurer the remaining £400. Many online insures let you set your own excess, but the lower the excess, the more expensive the premium will be.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.