Number of “essentials” or “lighter” car insurance policies are now at an all-time high

New data from Go.Compare car insurance has revealed that the number of “essentials” car insurance policies has almost tripled since the introduction of the General Insurance Pricing Practice (GIPP) on January 1st 2022.

Often called “essentials”, “light” or “value” policies, these insurance products traditionally offer a lower price for car insurance, but the experts at Go.Compare are warning that this doesn’t come without reduced cover.

The comparison site can reveal that, since the introduction of GIPP in 2022, the number of “essentials” car insurance policies that are available on the market has gone from eight to 22. 

Tom Banks, car insurance spokesperson for Go.Compare said, “Since GIPP came into force in 2022, we’ve definitely seen an increased number of “lighter” policies introduced into the market. This is generally good news for customers because it offers more choice, more flexibility and cheaper options. However, customers have to be aware that, with this type of policy, they may be getting less cover than they would have been previously. For example, these policies may not include cover for windscreens, personal belongings, lost or stolen keys or child car seats as standard.

“If you are looking at purchasing one of the “lighter” policies, it’s really important to check that the cover is right for you – for example, 30% of Go.Compare customers have children under the age of 16 – many of whom will be using a car seat – so for those policyholders, it’s worth checking that you have child car seat cover in place as many of these lighter policies won’t have this as standard.” 

GIPP, which was introduced by the FCA in September 2020 – and officially came into force in 2022 – meant that insurers had to offer new and existing customers the same price for their insurance policy, so the price calculated at renewal must not be higher than that offered to a new customer. The rules applied to car, home, van and bike insurance.

Tom continued: “GIPP was a big change for the insurance industry because it signalled the end of the so-called “loyalty penalty”. In the year after GIPP, we also saw car insurance prices rise exponentially (see graph below), so the increased number of “lighter” policies that have been made available is a good thing because it provides more choice for motorists – but this is also why it’s so important to check the levels of cover in a policy before you buy.”

Tom added: “With car insurance prices having increased in recent years, customers are understandably trying to make savings where they can, but it’s important to make sure you’re still getting a policy with everything you need. In addition, being aware of the factors which could impact your premium is a good way to think about saving money, whether that is your location, age or mileage. These aren't always things you can change - but there are a few things you can do to make sure you are getting the best deal.”

More information about how you can save on your car insurance can be found here https://www.gocompare.com/car-insurance/guide/top-tips-for-cheaper-car-insurance/.

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