Do comparison websites really save us time and money?

Insurance comparison websites are the first point of call for lots of people. They offer speed, convenience and savings, but does this come at a price?

What can go wrong?

Most comparison websites force insurance providers to comply with standardised questions in order to produce a comparison. These forms mean that not all of the questions users get asked are the ones that individual insurers require. This means when you come to apply for a policy the final premium you’re offered could differ to the one advertised on the comparison site.

Pre-populated forms have also been shown to cause users trouble. Research by Telegraph Money shows that Moneysupermarket presumes Buckingham Palace to be a bungalow built in 2000 rather than the royal residence constructed in 1703 with 755 rooms.

While we’re sure that the Queen isn’t taking any risks when it comes to insurance, misrepresenting your property can have serious consequences. Whether you underestimate the value of your belongings or accidently record an extra bedroom as a study, an insurer will view it as your responsibility to disclose information about your property accurately. If you come to make a claim and your insurer realises you have been inaccurate, they may have cause to reduce how much they pay out.

This problem has become such an issue, leading industry body, the British Insurance Brokers’ Association wrote a letter to the Government criticising the accuracy of pre-populated data on comparison websites¹. The FCA also called for greater investigation into the impact of “big data” on consumers back in 2016².

Terminology can also go unexplained on comparison websites. Policies shown on comparisons sites that offer “unlimited cover” doesn’t always explain the fact that there are still “inner limits” for items such as bikes, jewellery etc. This is usually left to users to investigate further. Jargon such as this, without explanation, can be misleading to people who are pursuing the promise of cheap, easy to arrange insurance.

Using pre-populated forms risks misrepresenting what you’re trying to insure combined with unhelpful jargon can lead to unsuspecting consumers buying the wrong policy. As usual problems only come to light with insurance when you come to make a claim. Any disputes you have with your insurer about a claim are between you and them. Whichever comparison site you’ve used, won’t be there to help you. To find out why an insurer might not pay a claim you can read our previous article here.

Is it any wonder that in 2019, the Association of British Insurers (ABI)³ warned that two thirds of millennials believe that insurance firms may fail to pay out in the event of a claim?

Who are comparison websites for?

Creative adverts, appealing incentives and the promise of cheap insurance make it look like comparison websites are designed to help us but it’s worth considering who is actually paying them.

Comparison site business models work on delivering traffic to advertisers (aka the insurance providers). They value users in large quantities because it means they can charge advertisers more. The way they are paid can vary depending on their agreement but for the most part, their primary objective is to get large volumes of users to the advertisers who pay them.

There is no clear information on how some comparison websites choose which insurers can be listed on their sites. You might well find your quote results show some little known, online-only brands giving you the cheapest quote. If you’re protecting things as important as your home or car, you need to be able to trust the business you’re buying from.

So while restaurant or cinema vouchers are great perks, when it comes to insuring the big stuff in your life, how can you be confident you’re doing it properly?

How to get what you’ve paid for

Comparison websites are great if you’re prepared to be savvy and critical about what you’re buying. Here are our top tips to get the most from your insurance;

• Make sure you give the correct information to the best of your knowledge. Whether you’re buying insurance for your car, home, travel or even life insurance, be sure to complete the quote forms as accurately as you can. This also means being honest about your claims history.
• Understand the terminology and look at policy exclusions. Check what will and won’t be paid for in a claim and for how much. For property insurance, make sure you’re aware of obligations around maintaining your property. Insurance is for emergencies so any claim that is a result of wear and tear is unlikely to ever be paid by any insurer.
• A straight forward way of getting a cheaper quote is to increase your voluntary excess. This is like a promise to your insurer that you’ll only make a claim when you desperately need to.
• Check with an insurer whether there are any discounts for being a responsible policy holder; for example by having security systems on your home or black boxes for car insurance.

If you feel more comfortable speaking to a human being, at Lloyd & Whyte we arrange personal insurance for thousands of healthcare professionals. We deal with this stuff all the time so we can help you arrange your insurance properly right from the beginning. We also have in-house claims support who will work on your behalf with your insurer.

https://www.telegraph.co.uk/insurance/home/buying-insurance-price-comparison-websites-could-invalidate/

https://www.fca.org.uk/publications/feedback-statements/fs16-5-call-inputs-big-data-retail-general-insurance

https://www.abi.org.uk/news/blog-articles/2019/02/re-establishing-trust-is-job-1-for-insurers/