Vroom for improvement: Majority of car insurers offering poor value for money, Which? survey finds
The customer survey analysis - which measured claimants’ overall experience with their provider as well as their views on different elements of service - found that 19 out of 27 providers could only muster a paltry two stars out of five for value for money - an increasingly important consideration for many motorists battling the high cost of living.
Lloyds Bank finished bottom of the rankings when it came to customer score with a disappointing 59 per cent. Admiral, Sainsbury’s Bank, 1st Central, Hastings Direct and esure all posted customer scores of 60 per cent. All six providers scored a poor two stars for value for money.
The research comes at a time when car insurance premiums remain at eye-watering levels. Figures released by the Association of British Insurers show that on average motor cover was 25 per cent more expensive in 2023 than in 2022.
Higher premiums have forced many motorists to consider more budget-friendly policies, often offered by firms in a bid to make their range of deals more competitive.
Which? looked in-depth at the cover in more than 60 policies offered by 28 insurers, including seven so-called ‘essentials’ products from Admiral, Churchill, Direct Line, Hastings, Quote Me Happy, Sainsbury’s Bank and Tesco Bank. The highest scoring of these was from Sainsbury’s, mustering 60 per cent - slightly below the overall average policy score of 64 per cent. Hastings’ Essentials policy scored a lowly 44 per cent.
Lower prices on more budget-friendly policies may well place them higher up on comparison websites than more expensive comprehensive policies, however Which? is warning motorists to check the smallprint of policies after finding concerning gaps which could leave motorists high and dry should they need to make common claims.
Stripped back policies offered by four providers - Hastings, Quote Me Happy, Sainsbury’s Bank and Tesco Bank - removed cover for glass damage, which the survey found was the second most common kind of claim drivers make on their insurance after accidental damage - with windscreen claims accounting for a fifth of claims made by drivers in our survey. This leaves motorists at risk of facing a hefty bill for repairs.
Insurers price policies for customers in different ways and it is possible that some motorists could be quoted a cheaper premium for one provider’s standard policy than an ‘essentials’ policy from another provider - and even a premium policy for less than a standard one. Customers should ensure they are checking price comparison sites as well as getting quotes directly from providers not on them, such as Direct Line and NFU Mutual.
Some providers did excel, however, and earned the coveted status of being a Which? Recommended Provider (WRP). To achieve WRP status, firms needed to offer at least average levels of cover in their standard policies, as well as a customer score of at least 70 per cent which are based on how satisfied customers were and how likely they would be to recommend their provider to a friend or family member.
NFU Mutual was once again named a WRP, achieving an impressive customer score of 81 per cent that was head and shoulders above its competitors. NFU Mutual also posted the highest score (four stars out of five) for value for money. Respondents praised NFU’s ability to deal with queries - it was the only insurer to receive a full five star rating on this measure.
LV was also awarded WRP status. With a customer score of 70 per cent, the provider was found to have consistently good cover, and a policy of offering a lifetime repairs guarantee. LV also achieved four stars in our customer survey for dealing with queries, and three stars for value for money.
Finishing second in the table, but missing out on WRP status due to not achieving a high enough policy score in its standard policy, was Axa. The firm posted a solid customer score of 70 per cent but fell short with a disappointing policy score of 57 per cent.
Consumers’ poor experience of value for money in car insurance is further eroding trust in the sector. In December, Which? reported that trust in the insurance sector had fallen to the lowest level since we began tracking it in August 2020.
Insurance firms have been required to provide fair value since January 2022, requirements which were strengthened with the introduction of the Consumer Duty last year. Which? is particularly concerned about how customers who pay monthly for their premiums may be being ripped off compared to those paying annually. Which? has called on the FCA to produce an action plan to make sure that firms are providing fair value in the interest rates they are charging customers.
Firms are also required to make sure that their products meet the needs of their customers and that customers understand the information they are given and make informed choices. Given the high rates of claims for issues such as glass damage which some policies do not cover, Which? wants the FCA to make sure firms selling products with major exclusions are evidencing that their customers understand the risks they are taking in opting for these policies.
Rocio Concha, Which? Director of Policy and Advocacy, 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.
“Value for money remains a key consideration for motorists shopping around for insurance and the FCA must ensure that firms that sell policies with major exclusions are clear about these to their customers.”
-ENDS-
Notes to Editors
Which? surveyed 2,793 car insurance policyholders who had claimed within the past two years in November 2023. Which? experts also conducted a separate analysis of 61 policies offered by 28 providers, giving a policy score for each.
Customer scores reflect general satisfaction with the insurer and the likelihood customers would recommend it to friends and family.
About Which?
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