A whopping three-quarters of UK drivers mistakenly believe that third party car insurance is always cheaper than comprehensive policies – despite the latter now being significantly cheaper.
A third of drivers who go out looking for third party cover do not look at the whole market, and could end up over-paying by £929, new research from uSwitch has revealed.
“There are a number of reasons why motorists continue to misunderstand which insurance policy type is cheaper,” Sabrina Webb, car insurance expert at uSwitch, told Insurance Business.
Traditionally, younger drivers facing expensive premiums have favoured third party policies as a way of bringing down costs: motorists aged 17-24 are nearly five times more likely to search for third party cover only, compared to the over 55s, the research found.
“However, as the number of providers offering third party policies has fallen, and as motorists who take out this type of policy traditionally make more, and pricier claims, this has resulted in the price of these policies increasing to the point where now, the average third party policy is over £1,000, compared to under £700 for fully comprehensive cover,” Webb explained.
The cost to younger drivers of assuming that third party cover will be their cheapest option can be hefty. The average third party quote for young drivers is a staggering £3,529, while a fully comprehensive policy is more than £1,400 cheaper, at £2,125 on average, the survey found.
“There is work for the insurance industry to do to help improve motorists’ understanding of the issue,” Webb said. “In the first instance, where a consumer can make a saving by taking out a policy type which offers more cover for a lower cost, the onus should be on the provider to notify of the potential saving,” she urged.
“It would also be helpful if motorists could more easily compare different policy types, by seeing them side-by-side, so that price can be more easily compared, and therefore the consumer can make a better-informed decision,” Webb added.
As a result of the findings, uSwitch has set up a new search function which gives drivers the option to list all car insurance cover options when running a search, which it says means drivers will see the cheapest cover available to them irrespective of policy type.
While there are a number of factors driving the price difference between the average cost of the two policy types, the company says the findings raise a bigger issue.
Webb added: “Regardless of the reasons, it does leave the fairly reasonable question of, why does it cost motorists more to get less cover?”
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