The add-on rip-off: how insurers milk you for cash

Comparison sites made getting insurance easier, but customers may not know what they’re buying, reports James Connington

Customers are struggling to compare the price of insurance policies thanks to expensive, rarely used addons that can add significant amounts to the premium when they “should cost pence”, experts have warned. Picking an insurance policy – for a car, home or travel – is deceptively complicated. What’s included, and the cost of adding extra cover, vary hugely between similarly priced policies and even between brands owned by the same parent company.

Comparison websites have enabled customers to view a huge range of quotes in one place, but these are not like-for-like in terms of quality and cover. Prices also vary between the comparison sites, with the best deals not available on all.

Add-on options for car insurance can include legal protection cover, personal accident cover, breakdown cover and more. These options are typically presented to a customer once they have selected an insurer and clicked through to its website.

James Daley, founder of consumer group Fairer Finance, said: “Add-ons tend to be overpriced. Part of the problem is that what you see on a comparison website is generally an unbundled basic price.

“Once you’ve left the competitive environment of a comparison website and gone to the insurer’s website to complete the purchase, you then add on the extras. At that point you’ve lost all ability to compare the price of the add-ons with other companies’ quotes.”

Telegraph Money ran a search on a popular price comparison website to see what it would cost to insure a 2018 model Ford Focus hatchback for a typical middle-aged driver.

Hastings Premier’s quote for £398 included no compulsory excess, £250 voluntary excess, personal accident cover, a guaranteed courtesy car, breakdown cover and motor legal protection.

LV= quoted £430 for a policy with the same voluntary excess, which is in the same price range and might tempt a customer more familiar with the brand. However, it has a £50 compulsory excess on top, and includes only personal accident cover. To add breakdown cover, motor legal protection and a courtesy car costs £70, taking the total to £500.

Brian Brown, of insurance rating service Defaqto, said: “Customers who are thinking of buying insurance with some of these add-ons should look at the overall bundle price from each provider. It’s quite possible that some insurers are underpricing their main policy while overpricing their add-ons, in the knowledge that customers are likely to purchase them.”

To complicate matters further, those add-ons – which the customer may not want or need – are typically insurance policies themselves, with varying levels of cover and exclusions.

Deciding which add-ons are necessary, comparing the cover they provide and working out which offers the best value adds another layer of difficulty.

To add breakdown cover to Post Office Money car insurance would cost £31.99 as displayed on one popular comparison website. This doesn’t include cover for using the wrong fuel, running out of fuel, driving in the European Union, or onward travel if the car is not repairable.

For £44.95, Admiral’s breakdown policy includes all of those things except the EU cover. But a cheaper add-on beats them both: for £26.99, More Than’s breakdown cover includes everything. However, this insurer’s main policy was the most expensive of the three.

On clicking through from the comparison website to each insurer’s site, there are even more breakdown cover options available at different