The car insurance industry is starting to feel the pinch as many customers are looking for the cheapest possible insurance cover that is available to them.
A recent survey carried out by a leading price comparison site discovered that one in five British motorists fell that they need to opt of the cheapest level of car insurance in order to cut down on their outgoings.
This new survey discovered that whilst many insurance customers are shopping around for the best possible deal, they are now choosing to forego the optional extras and going for the minimum legal requirement of third car party insurance.
The survey which questioned motorist about their recent
car insurance policies discovered that around six per cent of third party insurance holders have downgraded their policies from full comprehensive cover over the recent months in a bid to save money. This move being made by car insurance customers is understandable when the statistics show that fully comprehensive cover is on average 11 times more expensive than other insurance policies, which offer less protection.
Mark Monteiro, an insurance expert for the price comparison site, warned motorists that third party cover could be "a false economy". He added that this is due to the fact that, "in the event of an accident a motorist is in danger of having the amount saved on the premium completely wiped out by the cost of any repairs to their vehicle". So with many choosing to have minimal cover in an effort of saving money, is it really worth it or do the benefits of fully comprehensive cover outweigh the money saved by having third party
insurance.
What is third party cover?
Car insurance is a legal requirement before any driver can take to the road. The minimum insurance required to drive is what is known as
third party insurance. This basically means that if you are responsible for an accident your insurance company will cover the damaged caused to the other car but not to your own, this works the other way round if you are hit by a driver with third party insurance. This type of insurance cover does not cover theft, vandalism or fire damage to your vehicle but these can all be optional extras if you are willing to pay a little bit more.
Many insurers will only recommend third party cover if your car is extremely old and it would be cheaper to replace it rather than repair it in the event of a crash. When people are thinking about downgrading to third party it is important to consider the cost of repairs in the event of a crash even a dent or scratch can cost several hundred to repair.
What is comprehensive cover?
Comprehensive cover, provides financial assistancer in the event of a crash. The insurance company will pay for the repairs on your car even if it was your fault. This kind of cover will also cover theft, vandalism and those 'acts of god' which can lead to your car being damaged. A comprehensive policy will cover all the bases but it may not be value for money if you’re driving a clapped out banger.
Another study by Sainsbury’s has discovered that around 4.5 million drivers are considering downgrading to second hand cars in an effort to save money. If this is true then many car insurance providers could see many downgrading their cover to go along with the cheaper cars.
