- ‘Essentials’ car insurance offers less coverage than standard comprehensive insurance
- The big appeal of essential policies is that they offer a cheaper alternative.
- But experts warn that drivers may not be aware that these agreements offer less protection.
Drivers are urged to be aware that cheaper “essential” car insurance policies may not give them the protection they expect.
Experts at campaign group Fairer Finance say many insurers are “rapidly introducing” cut-price lines of car insurance, often branded as “essential” or similar.
But these cheaper policies often leave out coverages drivers might expect, such as windshield coverage and payments for stolen keys, which becomes a problem if drivers don’t know it.
Cheaper car insurance is particularly attractive because of rapid price increases that mean the average driver now pays a record £635 a year for cover.
Key Point: Many “essential” auto insurance deals don’t pay for lost or stolen keys
But Fairer Finance is now asking insurers for full transparency about what these reduced essential policies do and do not cover.
Among the 10 largest auto insurers, 60 percent now offer “essential” policies.
These policies may omit many features found in standard auto insurance policies.
Common exclusions on “essential” policies include windshield coverage, stolen key replacement, and courtesy vehicles.
Many also leave out the “uninsured driver promise,” a guarantee to reinstate no-claim discounts and refund the excess if you are involved in an accident with an uninsured driver.
For example, Admiral’s Essential policy does not include coverage for driving abroad, personal belongings in the car, stereo insurance or windshield coverage, all of which are included in Admiral’s next highest insurance offer.
An example motorist insuring a Peugeot 207 would pay £475.09 a year for Admiral Essential cover and £500.09 for Admiral standard car insurance.
Similarly, a Churchill Essentials policy costing £513.11 a year does not include cover for driving abroad, loss of keys, personal possessions or a protected no-claims discount. But a standard Churchill policy, which costs £568.09, includes all of these things.
Admiral, Ageas and Hastings have offered essential policies for some time, but in 2023 Churchill, Sainsbury’s, Boom, Moija and Geoffrey Insurance launched them.
Fairer Finance managing director James Daley said: “As many customers will opt for basic cover due to the lower price, it is vital that insurers and comparison sites are clear about the exclusions and limitations of these policies.” Individuals should understand these restrictions at the time of purchase and not at the time of filing a claim.
Individuals should understand these restrictions at the time of purchase and not at the time of filing a claim.
‘Many insurance brands that previously had a single comprehensive car insurance policy may now have three or four different sub-brands, all offering different levels of cover.
“This combination of brands is designed to ensure they can keep their name at the top of price comparison lists, but it makes choosing the right policy even more difficult for consumers.”
Fairer Finance’s Daley questioned whether there should be a minimum standard for comprehensive auto insurance.
He added: “By offering low coverage limits, insurers can reduce their claim payments while maintaining the ‘comprehensive’ label on their policies.”
