Car Insurance Policies Comprehensive in Name Only

Car insurers have started rewriting the English language. The dictionary definition of comprehensive is 'something that includes all or much'. But insurers have been gradually stripping out sections from their policies, leaving drivers with cover that is comprehensive in name only.

Features that used to be standard in virtually all comprehensive car insurance, such as third-party liability cover for driving any vehicle, or an extension of cover for short trips overseas, are disappearing. Courtesy cars and recovery of any uninsured losses when you are at fault are becoming costly optional extras.

Research conducted by the British Insurance Brokers' Association found alarming examples where comprehensive cover has been eroded.

For example, Quinn Direct does not cover personal effects in the car. Insurance against damage to windscreens or other windows is available only as an optional extra. The 'comprehensive' policy sold by RAC does not allow a policyholder to drive any other car, while features such as a courtesy car and insurance overseas are optional extras.

Hayley Parsons, chief executive of comparison site gocompare.com, says: 'The importance of comparison sites has meant it is key for insurers to get near the top of the rankings on price and they can do that by slimming down the cover.'

Graeme Trudgill, technical services manager at Biba, says: 'All the advertising is about price. It's no longer focused on providing the right financial protection for the motorist.

'Even if an element of cover remains, the sum insured may be reduced. Many insurers have lowered the limits for loss of items from the car, for accidental damage to the windscreen or for personal accident cover.

'And in some cases, such as an accident involving a younger driver, the compulsory excess charged has increased.'

Tesco, for example, makes customers pay the first £75 of any windscreen claim and levies a £350 compulsory excess for drivers aged between 21 and 24. This all means that motorists who want to be sure they are fully covered need to check the insurance small print carefully.

Amanda Smith did her homework before signing up with specialist women's insurer Sheilas' Wheels for her Audi TT Cabriolet.

Amanda, 33, a marketing manager, got the car new after a four-month wait and says: 'There is no way I would have anything less than fully comprehensive insurance.'

She pays £380 a year for cover, which includes a protected no-claims discount and allows Amanda to drive other cars in an emergency. There is also a generous £1,000 allowance for loss or damage to the stereo and satnav. As well as full cover for the car, Sheilas' Wheels gives a £300 'handbag allowance' and £200 of cover for personal belongings if anything is stolen from the car. This delights Amanda, who lives on Anglesey in North Wales, with her partner Simon Leung. 'The cover for personal belongings is reassuring because you can easily end up carrying lots around with you,' she says.

Trudgill says: 'Think about what features matter to you. Also, how much could you afford to pay in the event of a claim. You may find that paying slightly more than the cheapest premium actually gives you a better value option.'

Speaking to a broker can also give a different perspective.

Norwich Union, for example, has removed cover for driving other cars from the insurance it sells direct. But it retains this in policies issued through brokers.

Loyalty falters as premiums soar

Soaring insurance costs are the latest blow for hard-pressed motorists.

Analysis by management consultant Deloitte shows that premiums have risen by 8.2 per cent in the past 12 months to £488 a year on average.

Catherine Barton, insurance partner at Deloitte, says: 'This is the biggest annual rise in premiums we have seen in a long time. Insurers have been releasing money from reserves over the past few years to keep competitive, but this is drying up and premiums are having to rise.'

The Deloitte figures suggest that premium inflation is accelerating. In April, AA Insurance reported a 5.8% annual rise in motor premiums. But motorists can fight against rising rates. Good deals are still available, especially for those with a clean driving record and big no-claims discounts.

Ashton Berkhauer, head of insurance with comparison site uSwitch.com, says: 'The number of people shopping around and not accepting their insurers' renewal has increased.

'Typically, 80% of customers renew with an existing insurer, but we've seen that slip to 65% for some companies.

'Drivers are under increasing financial pressure and so they are becoming more price sensitive than ever before.'