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Is there such a thing as cheap car insurance?

Yes, it is possible to get quality car insurance that is cheaper that an equivalent product that is being offered at twice the price, so we would regard this as cheap car insurance.

The word “cheap” does signify lower quality or less cover, so a lot of insurance providers would rather position themselves as offering “lower cost insurance” or “competitive quotes”. Whatever terminology they use in their marketing campaigns, the message they are trying to get across is that they feel they can offer you cheap car insurance, when compared to comparative deals.

This then poses another question; Why can some companies offer cheaper car insurance than others? – The answer to this is not a simple one as there can be numerous factors of why one company’s rates are higher than another’s. Let’s split insurance companies and intermediaries and look at some of the reasons why their prices may differ.

Insurance companies; a lot of insurance companies aim for specific markets dependent on where they feel their underwriting expertise and best returns lie. So if you are a young driver and obtain a quote from a company that doesn’t particularly wish to attract young drivers, because their past underwriting results for this particular segment of the market are poor, their rates will be set accordingly, i.e. much higher that an insurer that has had good experience within this particular niche.

Other companies may be looking to buy market share, so are prepared to make less money on the sale of a car insurance policy, in order to obtain a client, to which they can sell other products and services to.

Insurance intermediaries; have much less of a say when it comes to setting insurance rates. Certain intermediaries may have negotiated different deals with insurance companies, i.e. special schemes for certain market segments. It is this sort of relationship which usually accounts for any major difference in price. Aside from this, the only price flexing that intermediaries possess is within their own commission, so it is down to how much they want to make per sale of an insurance policy, or how much they need to make depending on the slickness of their business and the cost of their overheads.

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