Car insurance warning as cash-strapped drivers buy basic policies that could leave them ‘high and dry’

The cost of car insurance has soared over the last two years, with NimbleFins research now showing the average price paid was £627 in the fourth quarter of 2023. This is an increase of 34% in just one year.

The price rise has seen more drivers take out basic policies in a bid to save money. But research suggests these can actually be less value for money, with "concerning gaps which could leave motorists high and dry" when they come to make a common claim, Which? says.

What’s not included in basic car insurance policies?

When looking at cover in more than 60 policies by 28 insurers, Which? found some basic policies did not cover glass damage leaving drivers having to pay for the repairs themselves.

Chipped windscreens are the second most common claim drivers make after accidental damage.

When looking at lower-tier policies, NimbleFins found onward travel cover after an accident (e.g. travel expenses and/or hotel cover), breakdown cover and motor legal were also often missing.

From our own research into basic car insurance policies, we know big insurance brands Admiral and Churchill have created entry-level tiers of comprehensive car insurance to appeal to those on tighter budgets.

We do like that these offerings provide access to comprehensive cover at even more affordable premiums, but we've noticed that the basic policies do indeed miss out on some features that some people might expect.

For example, neither Admiral Essential nor Churchill Essentials policies include a new vehicle replacement, personal belongings cover or aftermarket entertainment equipment - all features included in their higher tiers of comprehensive cover.

But while Admiral Essential doesn't include windscreen cover, Churchill Essentials does.

Erin Yurday, CEO and co-founder of NimbleFins, said: “Going for a lower-tier policy can be a great way to save on your premium - so long as you are aware of what features are included and missing, to ensure you are buying a policy suited to your needs.

“It’s always a good idea to check the small print and make an assessment as to whether you could afford to pay for the things missing from a policy, and the likelihood of an incident.

“We have access to scores of car insurance quotes so you can easily compare prices and what’s included.”

ABI working to reduce car insurance costs

Car insurance costs have risen over the last few years since the coronavirus pandemic as the price of parts, energy and labour soared. NimbleFins research shows the average price paid for car insurance was £416 at the beginning of 2022, quickly rising more than £200 in the subsequent two years.

The Association of British Insurers said it was looking at ways to tackle the rising cost of motor insurance.

It has outlined steps it believes the industry, Government or regulators can take to improve the market.

These include informing drivers of which vehicles are more expensive to ensure to help people make informed choices.

A crackdown on fraud and uninsured driving would reduce the costs that are passed on to law-abiding drivers.

And working out ways to prevent vehicle thefts would also reduce insurance premiums, it said.

An ABI spokesperson said: "Understanding what your policy includes and any excesses involved is vital and our members are committed to ensuring information is presented in a way that is as straightforward as possible.

"When looking for motor insurance, we would always recommend shopping around to find the policy that best suits your needs."

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