Comparing prices at the click of a button, for anything from car insurance to holidays and energy bills, has become a key money-saving tool in recent years.
These price comparison websites can let you shave hundreds of pounds off quotes, and leave you in a much better bargaining position.
As one example, figures from AA Insurance show that the typical car insurance quote for someone aged between 40 and 49 years old was £824 across the market in April. But if someone in that age group used one of the cheapest quotes available on the market by shopping around, the amount they paid would drop to £501.
However, new findings from consumer group Which? underline the importance of treating websites with care. Only one third (32%) of the consumer group’s members said they trust price comparison sites to find the best price, regardless of the supplier.
Which? carried out a test, which looked for the cheapest like-for-like car insurance quote from 10 comparison sites. The consumer group uncovered huge variations in the cheapest quotes given by the websites, with a difference of more than £1,500 across the market for the same scenario. It was quoted between £751 and £2,280 as the cheapest price for a 22-year-old car driver living in a high-risk area. Even for a lower risk scenario, quotes varied by £150 across the 10 websites.
Similar research by consumer help website MoneySavingExpert has also found big discrepancies.
Dan Plant, head of editorial at MoneySavingExpert says: “The emergence of price comparison sites has been a revolution for people trying to slash the cost of insurance, but they come with a health warning.
“Our research found big differences between the big-name comparisons when we looked at how cheap the prices are, whether quotes match up to the prices on insurers’ own websites, whether they’ll follow up with marketing calls, and how quick they are to use.”
New consumer watchdog the Financial Conduct Authority (FCA) said in its business plan that it is keeping an eye on comparison websites. Statutory body Financial Services Consumer Panel, which advises the FCA on consumers’ concerns, says it wants to see further work done to find out what impact a “lack of transparency” is having on customers.
One concern it raises is that some insurers use several brands aimed at different chunks of the market and this is not always clearly spelled out to consumers when they are trying to shop around.
So how can you get the most out of price comparison websites?
When using comparison websites, bear in mind that the best price is not necessarily the cheapest. The end goal is to find the cheapest price that fits your personal needs.
Value for money is key and the cheapest deal may not give you the cover you want or need, so make sure you have a thorough check through policy terms.
Which? found that some websites will make automatic assumptions, which could potentially leave consumers with a policy that does not suit their needs.
MoneySavingExpert has similarly found that the excess on the cheapest policies returned can “massively exceed” what was being searched for.
If you are not paying close attention to pre-selected options, you may not be comparing deals which are like-for-like.
A good strategy is also to use a few websites in conjunction, to make sure you are searching through as much of the market as possible.
Which? wants to see sites generally being much more up-front with consumers about how much of the market they cover.
Some companies will not be included at all as they choose not to be featured on comparison websites.
If you are searching for a new car insurance policy, it is also worth considering that the more basic option of third party cover is not always cheaper than searching for quotes for fully comprehensive deals. This is because insurers may assume you are likely to be a risky customer simply by wanting third party cover and they will push up their prices accordingly. One low-risk driver quote found by MoneySavingExpert was set at £290 for fully comprehensive cover – but shot up to £406 for third party cover.
The job title you enter in your search could also affect the quotes you are offered. There may be several job titles which accurately reflect what you do for a living, but your description must still be truthful or you could jeopardise your cover.
And it is also worth bearing in mind that you do not have to actually buy through a price comparison site. You could simply use the given quotes as a bargaining tool to see if your current provider will match the prices you have found.