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Car Insurance - New Style Policies Cut The Cost  

by Michael Challiner
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Get ready for an avalanche of "new style" car insurance policies to hit the market. One of the first insurers to enter the fray is Tesco, with the announcement of its new "no frills" policy. Where Tesco leads, others will swiftly follow in their search for new customers.

The AA doesn't seem too impressed with Tesco's offering, saying that the excess is really high and if you look around you could buy the usual fully comprehensive for the same price. Taking the opposite stance is Norwich Union who believes that other insurers will compete with simple, non-gimmicky, cover. Getting ahead of the competition, they have been watching the patterns of 5000 motorists over a two year period and they are starting to offer new policies based on their research.

Both of these insurers will aim to keep at the top of the "Best Buy" tables and the resulting competition between insurers to keep the premiums low and gain the business will be interesting to observe.

What is it that's so different about these new policies?

First of all there's Tesco's new "Value" car insurance. This is a type of "hybrid", coming higher in the scale of cover than basic third party but stopping short of the more usual fully comprehensive. For example, if your car is off the road, you won't get a courtesy car, it doesn't cover young drivers and at ?475, the excess is much higher than usual. Your no-claims discount will not be protected and if repairs are needed these can only be carried out by designated garages. Normal guarantees on repairs are three years, but they have reduced this to only 12 months. If you can accept these restrictions, Tesco say there will be a saving of 12% on its standard cover. Another proviso is that you must buy cover on-line.

On offer from Norwich Union is a young driver's policy. Not available to new customers for the time being, customers are charged according to their driving patterns. It has been found that younger drivers have a higher likelihood of accidents at night and so there is a charge of ?1 each time they drive between the hours of 11pm and 6am.

Direct Line, not to be outdone, has similar new products coming on to the market.

It all sounds slightly confusing and you have to consider what you're missing out on in the way of cover. It is possible for the more conventional fully comprehensive policy to be reduced if you're willing to sacrifice some of the cover or pay a higher excess. These deals are available on-line and easily accessible, but why tie yourself to one company? If you search on the internet for a car insurance broker and are specific about your needs, they'll do the research and come up with the right deal for you.

Older drivers have car insurance problems too. The Government may be considering whether regular eyesight and certain other medical checks should be carried out three yearly. The Association of British Insurers have requested this as they feel that with declining eyesight and age, responses could be slower and therefore older drivers could be more at risk of accidents. Age Concern, a charity representing the elderly, argues against this, believing that fitness to drive should be based on skill, not age.

The Association of British Insurers report that in fact older drivers have more accidents per mile than drivers in middle age and also state that there is a higher likelihood of injury or death resulting from a crash, both for them and other road users.

From the age of 60, car insurance premiums will start to rise as underwriters begin to get wary of taking on new clients. The AA tell us that, as an example, a woman of 21, who pays a premium of ?326, will find it reduced to ?197 at 60, but by the time she reaches 80 the cost will be ?460. There are policies designed to serve the needs of older people, Age Concern, Saga and Help the Aged are just three of them, but again, if you contact an on line broker, they'll have all the facts and be able to offer help on this.

About the Author

Scrouge Online are a large uk based finance website offering access to many financial services including car insurance and loans