Drivers risk paying hundreds of pounds more than they need to for car insurance due to a number of quirks in how insurers and comparison websites collect data, according to an investigation.
Differences between questions asked by car insurance comparison sites and individual insurers – and the resulting assumptions made by the insurers – can substantially inflate premiums offered to drivers, warns consumer group Which?.
In one scenario, seemingly small variations led to a motorist being quoted more than £200 extra because an insurer wrongly assumed they had made a claim for damage to their vehicle.
When using a comparison site to buy car insurance, drivers are asked a single set of questions agreed by the insurers on the panel rather than answering each insurer’s unique set of application questions.
This can lead to insurers gathering slightly different information about drivers to base their prices on than they would using their own questions, with two insurers confirming this can lead to different prices being quoted for the same person.
Examples include information about dashcams. While some insurers offer discounts of as much as 15 per cent for dashcam owners, only one of the four major comparison sites gave drivers the chance to specify whether they owned one or not.
Meanwhile, although it’s compulsory to declare all recent driving incidents, not all comparison sites let you specify which, if any, led to insurance claims, so some insurers make incorrect assumptions.
Which? found that Confused.com and MoneySuperMarket did not let drivers specify whether they had claimed on a reported incident.
Which? tested a scenario using both sites, where a south London-based driver had recently damaged his car but had not claimed for the repairs. When checking the assumptions made by the insurers offering the 10 cheapest quotes using these two comparison websites, two insurers – Hastings Direct and Churchill – wrongly guessed the driver had made a claim, and factored this into the premiums they quoted.
When corrected, Hastings Direct lowered its quoted price by £10, and Churchill lowered the premium by £207 – more than a quarter of the initial quote.
“When a customer is purchasing an insurance policy they are expected to declare any incident, accident or claim regardless of fault, in order for the premium to be generated,” Hastings Direct responded.
“Some price comparison websites (PCW) do not give customers the option to differentiate between an incident (no claim made under a policy) or a claim, and upon receipt of this data in cases such as these insurers make assumptions in order to generate a price for the customer.
“For this reason, when the customer clicks through to the Hastings Direct website, we do give the customer the option to check their data, which would enable them to specify further their claims data and disclose more information or to continue with the data they have entered into the PCW. We also work with our PCW partners and encourage them to provide as much specificity as possible in their question set, although ultimately this is their decision to make.”
A Churchill spokesperson said: “It is important that all customers provide their insurance company with all the relevant details they get asked of them when purchasing a policy. Anyone purchasing through a price comparison website who is unsure of what details need to be provided still has an opportunity to phone their preferred company to provide any further detail, should they feel it might have an impact on their premium.”
Perhaps more worrying, the investigation also found that seemingly irrelevant customer information collected by insurers, such as home-ownership, marriage status or job title, can have an influence on premiums if insurers find a correlation between these factors and making a claim based on existing customers’ data.
Which? ran a separate set of quotes for the south London-based driver, for example, and found that quotes were around 4 per cent cheaper if they were a homeowner. Charges were also 4 per cent higher if they were divorced rather than if they were married.
The way drivers describe their job title can influence premiums too. When the driver in Which?’s scenario described himself as a painter (working in art), his cheapest premium was £372, but when he listed himself as an artist, it was reduced to £343.
“When it comes to buying car insurance, drivers should be more empowered than ever thanks to comparison sites, incentives and introductory offers. So it’s concerning to find that drivers may be left out of pocket as a result of factors beyond their control,” says Jenny Ross, Editor of Which? Money.
Commenting on the investigation, a spokesperson from price comparison site Confused.com said: “We work closely with insurers to make sure the questions we ask give them the information to give an accurate picture of the customer. When it comes to incidents that have been disclosed insurers will validate the information with the Claims and Underwriting Exchange. This is a central database of motor, home and personal injury/industrial illness incidents reported to insurance companies which may or may not have given rise to a claim.
“While we are constantly reviewing our quote process, it is up to individual insurers to determine how they rate on individual risks. If we recognise that customers are disadvantaged we will pick this up with individual insurers.”
MoneySuperMarket responded: “We work with insurers to make sure we are asking customers the right questions so they can provide a quote, however, we do not control how insurers interpret our data, nor any assumptions they make.
“We don’t ask customers to supply the cost of a recent claim as this is often something they will not know in detail – for example, costs may have been paid direct by an insurance company to a garage for repairs to a vehicle.”