Notes

Never Compare Insurance Based On Price Alone
Insurance comparison websites simplify the insurance buying process and most people now buy insurance through these sites. Knowing the class of cover you will need, you type several details into any of these sites and instantly access multiple insurance companies with the cheapest quote displayed in a few seconds.

While the procedure for buying insurance especially car and home insurance appear simplified, same cannot be said of the products.

The insured enters right into a contract every time he/she buys an insurance policy and like any contract must be examined carefully to ascertain its suitability for the buyer.

The frequency of advertisement in both the print and electronic media by the owners of these sites drowns out complaints and muttering of individuals who may have had a claim declined since they based their insurance purchase decision on price (premium) alone.

As a way of illustrating the way the use of price alone to choose an appropriate insurance policy could be problematic, why don't we look at how the price of a burger is determined.

�0.99 could fetch you a burger at a McDonald's restaurant but that same store may also have a burger made out of a bun of similar size for �5.99. The difference in the price of both burgers being the topping.

While the cheaper burger may only contain beef, the more expensive offering will probably have a better quality beef, possibly bacon plus lettuce, onion, Mayonnaise, mushroom and pickles.

The �0.99 burger (let's call this the bare-bones burger) may interest some but may not necessarily be what others want.

The �5.99 burger (ROBUST burger) though more costly, that are what your partner must satisfy his appetite and is willing to pay the extra to meet his needs provided he could be alert to the extras which add up to make this other burger expensive.

Bare-bones vs Comprehensive policies

Similar to the example above, insurance policies can also be thought to either bare-bones or ROBUST/comprehensive. However, it isn't always possible for every insurance buyer to inform the difference between the bare-bones policy and the comprehensive, especially when presented in abridged versions with the least expensive ranked topmost.

Risks covered as standard by insurance company 'A' could possibly be sold as an add-on by company 'B'.

The premium quoted by 'A' may thus appear higher than that of 'B' as the standard policy 'B' offers is a bare-bones cover. In the event that you then opt for this policy due to the cheaper price without realizing that a number of the risks you need aren't included, this could result in a dispute whenever a loss/claim is reported.

Possible Conflict of Interest

A number of the comparison websites are either wholly or partly owned by Insurance firms and t here fore a conflict of interest may arise. Results of premiums quoted could thus be skewed towards the parent or partner companies.

Operators of these sites may also be swayed by the offer high commission rates leading to the websites promoting particular brands.

Some Insurers aren't Included

As at the same time of writing, some of the largest insurance firms in Britain notably Aviva and Direct Line are not listed on comparison websites so it is possible that improved terms could be obtained from companies not listed.

Finally, it is worthy of remember that these comparison sites only serve as a go-between, linking the prospective buyer to the insurance firms. They only present premiums generated using algorithms furnished by insurers and afterward direct a buyer to the website of the insurer with the chosen quote. In the event that a dispute arises, traceable to a misunderstanding at the idea of quotation, these firms are unlikely to assume responsibility.

Ikenna is a Chartered Insurance practitioner based in London with over 2 decades experience in Insurance operations. He has sold Insurance policies before, and at other times been involved in drafting / wording insurance contracts together with helping customers through the insurance claims process.

His unique perspective on insurance is therefore reflected in his articles which he hopes readers will see incisive and beneficial.
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