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Summary
Insurers are searching for new ways to bring down the costs of car insurance cover. Here are some of the ideas they've come up with.
Author: Dot Piper
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 ( cheap mortgages ) 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 ( mortgages ) 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 ( medical insurance ) 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.
Click here for part 2
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