Car insurance still cheap - but watch the charges

Tuesday, 31 October 2006 12:00

Despite moves from Norwich Union to increase its premiums this summer, car insurance remains cheap and Britons faced with increasing premiums should change providers, new research shows.

Currently the car insurance market is so competitive that providers are fighting for your custom, as such there are almost certainly discounts available for anyone faced with an increase in the cost of their car cover.

"The intense amount of competition in the market at present is keeping comprehensive premiums from rising despite well reported industry views that they must increase," said Brian Brown, head of general insurance research at financial analysts Defaqto.

"With the internet it is now so easy for customers to shop around and so many insurers are still giving introductory discounts, cashbacks or guarantees to beat other quotes, that there is little if any need for customers to stick with their existing insurer when faced with premium increases.

"The dynamics of the market at present may make it almost impossible to both raise premiums and hold market share."

Two insurers in three offer discounts for buying over the internet, and firms are increasingly offering cashback deals of up to £110.

However, many insurers are increasing associated charges to try and claw back some profitability as premiums stay cheap.

Charges are beginning to be increased for a range of services, including changing a customer's address with cancellation fees now up to £75 on some policies.

Some 62 per cent of insurers charge for policy adjustments; 35 per cent charge for duplicate documents; and 66 per cent charge to cancel a policy.

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