With the credit crunch continuing to gather pace, several car insurance providers have started to offer discounts in an effort to lure new customers to their brand. However, are these offers as good as they seem?
The latest deal from a leading car insurance provider offers new customers one day’s worth of free car insurance every year. With the financial climate forcing motorists to tighten their purse strings, it’s a neat incentive to pick up a policy from a respected provider for less.
However, the mistake many customers make with regards to discounts is to assume that these offers can’t be beaten. Many mistakenly believe that car insurance policies cost roughly the same from all providers and so a sizeable discount like this should not be snubbed.
Yet that is not quite how car insurance works. While a reduced premium on any policy is a welcome incentive, the fact is that there can be radical differences between policies from different providers in terms of both their price and the level of cover they offer.
A study by a comparison website in 2008 found that Swiftcover and Kwik-Fit are the most consistently cheap car insurance providers in the UK, but even they may not offer you the best deal. That is because insurers assess their premiums based on risk levels, and the criteria can differ from provider to provider.
For example, one insurer may deem you to live in a high crime area based on your postcode. However, another insurer may base crime figures on your street or look at the city you live in overall. So premiums can contrast greatly even with the same information provided.
There are many insurers that offer discounts – the most common are online discounts and new customer discounts, such as one month’s free insurance in the first 12 months. The key then is to not just look at which discount appears to be the best, but to see how all the insurers’ premiums compare after discounts are taken into account.