Insurance comparison websites simplify the insurance buying process and most people now buy insurance through these sites. Once you know the kind of coverage you need, write some details on any of these sites and immediately gain access to several insurance companies with the cheapest quote shown in a few seconds.
While the process of buying insurance, especially car and home insurance appear simplified, the same can not be said for products.
The insured enters into a contract each time he / she buys an insurance policy and as any contract must be carefully examined to determine its suitability for the buyer.
The frequency of advertising in the print and electronic media by the owners of these sites stifles the complaints and the murmur of people who may have had a claim rejected because they based their insurance purchase decision on the price (premium) per se alone.
As a way to illustrate how the use of price only to select an appropriate insurance policy could be problematic, let’s look at how the price of a hamburger is determined.
£ 0.99 could look for a hamburger at a McDonald’s restaurant but that same store will also have a burger made with a similar sized bun for £ 5.99. The difference in the price of the two hamburgers is the topping.
While the cheapest burger can only contain meat, the most expensive offer will probably have better quality meat, possibly bacon plus lettuce, onion, mayonnaise, mushrooms and pickles.
The £ 0.99 hamburger (call this the bare bones burger) may appeal to some, but may not necessarily be what others want.
The burger £ 5.99 (burger ROBUST) although more expensive may be what the other person needs to satisfy their appetite and is willing to pay the supplement to meet their needs provided he is aware of the extras they add to make This other expensive burger.
Bare-bones vs Comprehensive policies
Like the previous example, insurance policies can also be said to bare bones or ROBUST / sympathetic. However, it is not always easy for all insurance buyers to tell the difference between bare-bones policy and the integral, especially when presented in abbreviated versions with the cheapest ranked first.
The risks covered by insurance company ‘A’ could be sold as a complement to company ‘B’.
The premium quoted by ‘A’ may therefore appear to be higher than ‘B’ because the standard ‘B’ policy offers bare coverage. If you then opt for this policy because of the cheaper price without realizing that some of the risks you need are not included, this could lead to a dispute when you report a loss or claim.
Possible Conflict of Interest
Some of the comparison websites are wholly or partly owned by insurance companies and therefore, a conflict of interest may arise. Therefore, the results of the quoted premiums could be biased in favor of the parent company or the associated companies.
The operators of these sites can also be influenced by the high commission rates resulting in the sites promoting certain brands.
Some insurers are not included
As at a time of writing, some of the largest insurance companies in Britain notably Aviva and the 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 noteworthy that these comparison sites only serve as an intermediary, linking the prospective buyer to insurance companies. They only present premiums generated using algorithms provided by insurers and then 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 point of the appointment, these companies are unlikely to take responsibility.
Ikenna is a licensed insurance professional in London with more than two decades of experience in insurance operations. He has sold insurance policies in the past, and on other occasions has been involved in drafting / writing insurance contracts as well as assisting clients through the insurance claims process.
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