Who Is The Cheapest Car Insurer?

The cheapest car insurer usually varies greatly from father to son to neighbour to stranger, but some less well-known insurers are now showing up near the top of a wide variety of price comparisons.

Earlier this month I predicted that the cost of car insurance would rise due to the floods, because insurers will cross-subsidise the water damage claims. Now, Reuters reports that EMB, a leading actuary (which analyses insurance risks and computes premiums), has calculated that car insurance premiums might go up by as much as 10%.

If this happens, it'll be rather more than the modest amount I was thinking of but, then again, these people are the statisticians with all the data, whereas I'm just some guy who writes commentary. So I'll get on with that.

Some insurers will be worse affected than others, so once more we have another good reason to shop around. Which insurer will be the cheapest? Sadly, we can't know that. There are so many variables, from the strategy of each insurer to the scale of their payouts for flood damage.

But I may be able to point you towards the cheaper insurers today. Typically, the biggest problem when doing this is that prices vary greatly depending on your risk profile, so the cheapest is not likely to be the same for you as it is for your best friend, or when you lived on the other side of town, for example.

Yet today's market is surprisingly consistent. This morning I typed into The Motley Fool's car insurance search engine details of a male living in Hampshire with a four-year-old car and no claims or convictions. Using this as a template, I tried various other searches, changing only one thing at a time: age, address, the car, claims history, and the type of cover (from comprehensive to third party, fire and theft).

Unusually, the same insurers kept coming in the top places in most searches. Of our panel of 33 insurers searched, each time it was the newer insurers and brokers, or ones that are less well-known for selling insurance. These included such firms as Marks & Spencer, LocalBroker and ibuyeco. At the bottom, I found the old-school insurers, such as NIG, Zenith, CIS, Royal & Sun Alliance, Provident and Fortis.

Clearly, the unknowns (plus Marks & Spencer, but that retailer isn't best known for car insurance) are under-cutting more well-established insurers -- for the moment. Marks & Spencer did particularly well, and so is quite possibly the cheapest insurer on our panel at present.

But the best quote for each of us is different. No doubt some people will find M&S is off the pace, and maybe even that an old insurer is up there near the top. Plus, the odds are you'll be quoted a lot higher premium at renewal to make up for getting such a cheap quote in the first place. Watch out for that!

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