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Price comparison sites aren’t always good for your wallet

Is anything more irritating than price comparison site adverts? Yes, the sites themselves. Comparison sites have made it easier to shop around, but are they always working in your best interests?

As if opera singers, meerkats and scratchy-cartoon women singing YMCA aren’t bad enough; our research has found that using some price comparison sites can prove even worse.

Overall satisfaction scores for the sites we tested stood at a pitiful 42%. Why? How long have you got?

Of the 9,000 respondents to our recent survey, two-fifths didn’t make a purchase on the site after searching for a financial product.

When we asked why these people didn’t make a purchase, 14% said they just didn’t trust comparison sites, while 12% were unhappy with the quote they got. And almost 10% said the quote they got on the site differed from the one they were offered when they clicked through to the product provider’s own site.

Cheaper now, but it could cost you later

How could this happen? Surely there could be nothing more ‘simples’ than popping in a few details and seeing a range of results that are based on the information you’ve provided?

Apparently not, as the reality is many comparison sites use tactics that may be designed to deliver a quote as quickly as possible. To do this they use pre-selected answers, make assumptions and strip out additional benefits that you pay extra for, until after you’ve got your quote.

In some cases this can make quotes appear cheaper, but can result in you getting a policy that will cost you more in the long-run.

Unexpected surprises with pre-ticked excess

Take motor insurance as an example. Comparison sites will presume you don’t have any motoring convictions. But if you miss this box, and subsequently buy a policy, you could find yourself without cover if you do happen to have previous convictions.

Excess is also an issue. Nine of the eleven sites we looked at pre-selected a voluntary excess of more than £150. In one case (Moneyexpert.com) this excess was significantly higher, at £400. And that’s before the compulsory excess was added at the results page!

It’s obvious why this kind of action would irritate people. Say you’re buying insurance for your trusty motor, which is valued at £1,400. If you fail to untick the voluntary excess, you may have to pay £400 upfront in the event of a claim, right? Nope, because there’s the compulsory excess to factor in as well. If that’s £600, you’ll now have to pay £1,000 upfront.

Sure, you may get a cheap quote initially, but is it really worth it if you’re stumping up for most of the repairs? I don’t think so, and this is the key problem with comparison sites.

Price comparison sites may offer a convenient way to get dozens of quotes, but what you’re offered might not be what you were expecting.

Unfortunately, there’s no real way around the need to read the small print, and you’ll have to make sure you double-check every page of the forms that come with your quote. But then again, maybe that’s better than spending half a day on the phone with lots of different financial providers, hasn’t it?

GHW says:
9 April 2012

I wish Which? would do their own price comparison website.

Paul Lynas says:
18 April 2012

I used a comparion site last month, just to get a quote, and found that 3 insurers had carried out a credit search, this is totally wrong and needs to be stopped as it can have an adverse effect on many people and they won’t even know it is happening.
I did not give anyone the authority to carry out a search and to make matters even worse I pay my premium annually, therefore I would not require credit even if I went ahead with an application.

Mr M Dew says:
10 June 2014

The credit search is not for the purpose of obtaining credit or paying direct debits. I work in insurance for my sins as an in house underwriter. The credit search is actually part of some insurer’s underwriting criteria which people don’t seem to understand.

Motor insurance is a compulsory peace of legislation so everyone must have it-and therefore insurers must be seen to insure people. However, almost every insurer has made a loss on motor insurance for the last 20 years, as it is seen as unprofitable business, you will now see most of them attempt to try and insure your home and other products to make this up by offering multi discounts or add ons legal expenses and break down because of this.

Insurer’s don’t want to select every tom, dick and harry as they say because they have to they want to ‘select’ profitable business from the crop and people who regularly default payments, have bad credit or just unemployed are deemed more hazardous risks than others, it is relly just that simple and logical! They can’t personally know everybody in the UK, but are still expected to insure you so they use modern technology the same as you do to get as much information as possible before making a decision on a risk.
Also these people may be more prevalent to making fraudulent claims or personal injury exaggerations like whiplash which is the insurer’s assumption so insurer’s use credit searches as standard to give them a sense of who you are!

This is especially more important now that most people now go online, and they never even speak to you, but maybe potentially liable for thousands of pounds of costs if you are involved in an unfortunate incident. Personally, I think it is smart thinking, although online comparisons sites are generally the worst and just use it to get the lowest price, even if it isn’t the best product for your demands and needs and I wouldn’t recommend it unless you have heard of the underwriter of the policy as more and more companies are using financial providers from outside the UK and outside the compensation scheme we all pay in to each year to protect consumers from insurers who go bankrupt.

The main problem with insurance is that everyone thinks they are an expert, and think it should mysteriously be getting cheaper. Like everything else I am afraid financial services increases with inflation so if the economy is suffering like it has been in recession and the price of general commodities increase as they are, then so will your insurance its only natural. Stop trusting comparison websites and trust a friendly human. You wouldn’t buy your house online, without going to an estate agent or lawyer for expert advice, so why do the same with another legal contract that leaves you liable for financial loss?

Its about time people went back to a traditional broker where the onus is on them to ask for all the information and remove the responsibility from the policyholder to pretend they are financial experts…

James says:
10 June 2014

Spell-check would be usefully used in the future and may make one believe your crap. I, and many others do buy cars and houses and million pound art or tuppenny tat from the online flea -market .. .online. Cheap is always relative, but cheap is still cheap. Comparison, by definition is to FREELY compare between peer sites and sellers and products. Sites which flout these simple operational rules are not of any interest whatsoever. I use comparison sites more seldom nowadays as there is more information available to those who seek the best product for the price.

Very sensitively put, James.

What I don’t understand is the phrase ‘more seldom’ – I’ve never come across it in my 60 years of speaking English. Do you mean ‘more often’ or ‘less often’?

kbobt45 says:
19 June 2012

Is there nothing that can be done about most of these sites. Especialy Travel sites, the site itself may Not be doing anything wrong. but EVERYONE that I have used are the same, You type in all your details where fly from & to, your dates etc etc. you go to compare the various travel companies they give you all the various airlines and prices . so you compile a list of the best deals, BUT as soon as you contact the site they never never have the deal that THEY have put forward, but alway can offewr you a much mor expensive one. Surely this is Grossly Wrong and WHY is it allowed to take place. and HOW does one complain and who to.

DWS says:
20 June 2012

I have found that price comparison sites have saved me hundreds of pounds. If you take your time and read each page of the quotation process carefully, you can tailor a policy or product to suit you. I have not found cheaper policies available from those insurers who are not on comparison sites and I get quotes from them for every renewal. Just take your time.

Mr M Dew says:
10 June 2014

They can save you hundreds of pounds, but generally the ones that do are wrong. For example almost all household policies online exclude freezer contents cover or bicycles away from home but you won’t know it unless you read the insurer’s policy booklet or select an all risks policy for items outside the home as they are just offering you the best price with stripped back protection not actually the best product.

The question is…are you saving hundreds of pounds, or are you just leaving yourself open to more risk of loss in replacing items you thought were covered I know my bicycle isn’t cheap to replace.

Also most motor policies don’t allow towing trailers so you could be caught with a conviction for not having the right insurance an IN10 without knowing it. If you are a tradesman, also you can’t insurer tipper vans or unlisted vehicles online without an ABI code like a cherry picker if you are a business so you may get your claim kicked out if involved in an accident.

Be careful what you are buying, unless you are an underwriter or contact lawyer don’t assume you have got what you think you have without it in clear writing in front of you or a recorded phonecall. You know what they say about assumptions….it’s the mother of all….##~!! insert your own words here?