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Do price comparison sites offer the best deals?

Protection | Household Insurance

By Justin Modray, published 04 August 2010.
Helpful? 84

Price comparison sites are a booming business. And judging by their expensive (but annoying) advertising campaigns they’re fighting tooth and nail for your custom. But will they give you the best deal? And could you save money buying via cashback sites such as Quidco and Topcashback?

I’ve taken a look at a range of popular products and services to find out (all quotes obtained on 4 August 2010, Quidco used as an example for typical cashback):

Car Insurance

Moneysupermarket came up with the lowest quotes by some margin, while Direct Line (which has a policy of not featuring on comparison sites) was significantly more expensive. Interestingly, esure was a lot more expensive when trying to buy directly (even with £45 cashback) than the same policy via a price comparison site.

Adding an extra driver to your policy can be a nifty way to reduce your premium, as our sample quotes show. I guess some insurers view this as lowering risk – it’s always worth a try. I routinely add a relative my policy, as well as lowering my premium it gives them an extra car to drive.

WebsiteInsurerBest Quote
single driver (annual)
Best Quote
extra driver (annual)
Cashback via Quidco
Moneysupermarket esure £455 £402 n/a
GoCompare esure £496 £468 £1.50
Compare the Market esure £503 £427 50p
Confused esure £508 £468 50p
esure
£581 n/a £45
Direct Line
£892 £977 n/a
Quotes obtained for a 40 year old male living in NW1 on a 2007 Saab 9-3. 5 years protected no claims, social use only, £250 voluntary excess. Extra driver is a 60 year old female.

Verdict
Based on this example it seems that price comparison sites do come up with competitive car insurance quotes, some more so than others. If you have time it’s still worth checking against some direct insurers, but on the whole you can be fairly confident of getting a reasonable deal.

Life Insurance

Moneysupermarket again came up with the cheapest quote. Confused also delivered a good quote when taking into account the potential £52.50 cashback, although it’ll still cost more than Moneysupermarket over the 20 year term assumed.

LV= provides decent cashback via Quidco, but higher quotes when trying to buy direct compared to via comparison sites and brokers – a poor overall deal. And discount broker Moneyworld-IFA was cheaper than the comparison sites except for Moneysupermarket.

None of the price comparison sites makes it clear that for many people it makes sense to write life insurance benefits into a simple trust (to avoid the payout becoming part of your estate for inheritance tax purposes should you die).

WebsiteInsurerBest Quote (Monthly)Cashback via Quidco
Moneysupermarket Aviva (via theidol.com) £5.00 n/a
Moneyworld-IFA LV= £5.21 n/a
Confused Aviva £5.44 £52.50
Compare the Market Aviva £5.37 n/a
GoCompare Aviva £5.40 n/a
LV=
£6.39 £53.00
Quotes obtained for a 30 year old non-smoking male for £100,000 of level term assurance cover over 20 years.

Verdict
With the exception of Moneysupermarket, the comparison sites were not as competitive as a good discount broker. However, the competitiveness of Moneysupermarket's quotes tends to be erratic, so I'd always compare with discount brokers before buying - see our Buying Life Insurance Action Plan.

Home Insurance

The price comparison sites produced similar quotes except for Confused, which I suspect interpreted my input differently from the other sites – although the cover appeared to be the same.

Esure, a direct provider I’ve used in the past came up with a staggeringly high quote, even after £45 cashback.

WebsiteInsurerBest Quote (Annual)Cashback via Quidco
Moneysupermarket Ibuyeco £74.59 n/a
Compare the Market Ibuyeco £75.13 50p
Confused ING Direct £79.33 £1.00
GoCompare Ibuyeco £95.29 £1.50
Esure
£243.50 £45.00
Quotes for £40,000 contents insurance (£1,000 away from property), 1 bedroom flat in NW1, no voluntary excess.

Verdict
The price comparison sites appear to work well for home insurance, with not that much to choose between them.

Travel Insurance

Accurately comparing travel insurance quotes is very difficult, as levels of cover and excesses vary widely. The comparison below isn’t perfect, but gives a reasonable reflection on how the comparison sites stack up.

Moneysupermarket appears to beat the other comparison sites, but independent website EssentialTravel came up the cheapest when its generous 17% cashback is taken into account. One thing’s for sure, this is likely a far cheaper route than buying cover through a travel agent.

WebsiteInsurer/BrokerBest Quote (Annual)Cashback via Quidco
Essential Travel
£67.07 17% ( £11.40 on this quote )
Moneysupermarket Top Dog £61.50 n/a
Compare the Market Travel Insurance Club £66.80 n/a
Confused Top Dog £67.80 n/a
GoCompare A-Z Insurance £78.16 n/a
Annual worldwide multi-trip cover for a couple aged 40, including baggage and personal items cover, excess in the region of £50.

Verdict
The comparison sites did ok and provide a convenient way to compare multiple policies, but you could bag a better deal going direct via a cashback site. Whichever policy you choose check the levels of cover very carefully to ensure they’re adequate and beware ‘bargain’ quotes that have a sky high excess.

Electricity/Gas

I tried a few price comparison sites and the suggested energy providers and plans that could save me money were identical. Based on this I’d suggest using a price comparison site to find a suitable energy supplier/price plan that will save you money and then buy via cashback website.

The going cashback rate appears to be around £20 for switching electricity or gas and £40 if you switch both. Much better you pocket this money than a price comparison site.

Verdict
The price comparison sites don’t appear to have special deals, so bag yourself some commission by switching policies via a cashback website.

Telephone/Broadband

Much the same story as electricity and gas. The comparison sites generally produced generic quotes that were the same as going direct to telephone and broadband providers. Far better to buy via a cashback website and pocket about £50 or more in commission.

Verdict
Buy via a cashback website.

Saving

The price comparison websites can help you find ‘best buy’ savings accounts. But be careful, they tend to display accounts that pay them commission more prominently over those that don’t, so you might have to dig to find the best deals. Cashback websites may offer one or two deals, but the cupboard tends to be rather bare when it comes to savings accounts.

Moneysupermarket has started to offer exclusive market-leading deals which could be worthwhile; they’re currently promoting a ‘best buy’ Bank of Baroda fixed rate savings bond.

Verdict
Ok at helping you find decent rates, but not as transparent as they could be.

Investment

Price comparison websites have largely avoided investments, which is just as well given the occasions I’ve seen them try (moneysupermarket and fairinvestment) it’s been implemented badly. They’ve either a linked a financial adviser or a random selection of potentially unsuitable investments that just happen to pay a decent commission to the comparison site.

Verdict
Investments don’t really suit the price comparison model – avoid.

Overall

Price comparison sites are money making machines that operate on two simple principals. They want as many people as possible to visit their website and get a quote (hence the annoying ads) and then as high a proportion as possible to subsequently buy something (which relies on competitive quotes and/or your laziness). Don’t ever forget they’re in business to take your money.

Nevertheless, when running the above examples price comparison sites generally performed better than I expected. They certainly don’t offer the best deals across the board and some comparison sites seem to offer consistently better deals than others, so it pays to be wary (and choosy). But used carefully they can offer a convenient way to cut the cost of insurance.

When it comes to utilities you’ll almost certainly do better by using a cashback website (using a comparison site to highlight the best deals).

Savers might find comparison sites useful for hunting down best buys, but price comparison sites currently serve no useful purpose or investors.

I’d be really interested to get your feedback below. What’s your experience of price comparison sites? Have you found better deals elsewhere? And, if so, where?

If you found this article helpful, please add your vote by clicking here.


Readers' Comments (7) - To post a comment please register or login .


Comment by JOHNSM at 9:14am on 08 Aug 2010:

To get a fair deal, my wife uses Switch with Which?, and then any other comparison site, to confirm the result. Then by using www.topcashback.co.uk, she can get some cash back for switching through their site.As the cheapest electricity and gas for us was Npower, she got £130, for switching to them (now the cash back for a switch to Npower is £140). She uses the Top CashBack site to buy anything from ticket flights, to hotels, electronics, food, DIY stores etc. De facto, my wife will not buy anything, without checking, if she can get it through the Top cash back site first.To save on delivery charges, sometimes she is able to collect from the store directly i.e. Tesco, M&S, etc..Furthermore, the site pays an additional reward for introducing a friend ( she gets £5 per introduction until the 9th of August, then this drops to £1)


Comment by JOHNSM at 8:47pm on 10 Aug 2010:

It is important that if any one uses the TopCashback site, one must tick the box ; Remember me until I logout, otherwise it is possible to be logged out automatically from the site and then lose the cashback. Furthermore, in My Account,under earnings, it is wise to check if the transaction has been reported by the retailer. If not, under Enquires, a cashback claim ought to be submitted.


Comment by JOHNSM at 10:28am on 14 Aug 2010:

To make more savings we check prices on the site www.mysupermarket.co.uk, where prices on products sold by; Sainsburys,Tesco, Ocado, Asda can be compared.

For example, Allinsons strong bread flour 1.5kg cost £1.31 at Sainsbury's, but Tesco sells Allinsons Strong White Flour 3Kg for £1.72 ( 1.5kg at Tesco's costs £1.37). We bake our own bread, so the savings are considerable.

We try to act swiftly as stock could be limited and the price can change ( sometimes for the better too).The same applies to the TopCashback site.


Comment by justin at 3:17pm on 15 Aug 2010:

Thanks JOHNSM, some v helpful tips!


Comment by moneypenny at 4:50pm on 19 Mar 2011:

I used a comparison site three years ago to switch energy providers and have regretted it ever since. npower has unfathomable bills based on a two tier system, promises a £100 discount which they hope you will forget and overcharges at every opportunity. They have recently been forced by Consumer Focus to refund £70 million for overcharging during 2007-08. During our three years we have been overcharged, had to request the £100 discount twice and stop them calculating the direct debit over 6 months instead of 12. They now only bill twice a year effectively allowing them to keep the discount for a further 3 months. We should receive the discount in March but bills are now produced in June and December !

I will be switching away when our current tariff comes to an end otherwise we lose £140 (discount and dual fuel penalty for leaving early) I don't care if it costs a little more if customer service is good, npower are not worth all the hassle.


Comment by MarshellaSmith at 8:18am on 27 Mar 2011:

With the invention of internet, shopping has become a fun. And, cash back websites are like boons to the frugal online shoppers like me. Being a frugal buyer, I prefer to shop online, especially through cash back portals like Ebates, ShopAtHome and AAfter Search.


Comment by Victorias at 8:36pm on 29 Mar 2011:

Comparison sites save money. Some of them pay rewards for using them, but read the small print as sometimes they only pay once; so if you intend to use them again for switching in year or so, you may not be eligible for the rewards.
The Npower £100 discount for dual fuel is paid after continuous 12 month monthly Direct Debits.Our household received a refund of under £2 for an overpayment for the year 2007- 08, so the overpayment was not as great, as one would think when reading the above mentioned £70million."to refund £70 million for overcharging during 2007-08" I switched away from Npower in 2008, when other providers offered cash back plus lower rates. However, last year I returned to Npower, due to the lower units price, the £100 discount and the £130 cash back, giving savings of ca. £360. However, there was a teething problem when I switched, and I had to make sure that I was in the chosen plan. So it is always wise to check and keep records. My bill was due in March 2011, however Npower moved it to May. When I rung them I was informed that I can still have my bill sent in March if I want to.
I may have wasted one hour in total in sorting out errors, but I saved ca. £360 by switching to Npower. So I am still a winner (ca. £360 tax free per hour)
After a year, when all the discounts are applied, I can switch to a different provider if I wish to.