Car insurance policies set to focus on ‘adaptability and flexibility’ after lockdown ends
Morning Live: Expert shares tips on car insurance
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Specialists at Tempcover also warn changes made in lockdown may “not ever return to normal” as drivers become accustomed to a new approach to the roads. Alan Inskip, CEO at Tempcover has spoken exclusively to Express.co.uk about the new changes drivers are soon to face on the roads.
Pay as you go policies
Those with annual car insurance policies were caught out last year with many paying hefty costs for little usage.
Just a handful of firms offered one-off refunds to customers leading insurance firms to pocket an extra £1.3billion over lockdown.
Mr Inskip has warned the fallout could change drivers’ behaviour with many now looking at pay as you go charges as a “viable solution”.
Speaking to Express.co.uk, he said: “The Chartered Insurance Institute notes that these shifts in consumer behaviour will ultimately have an impact on what customers want from their insurance products.
[They cite] ‘pay as you go’ insurance as an increasingly viable solution, where policies are usage-based and provide temporary cover that can be extended to borrowed vehicles for work purposes.
“Temporary policies include one-day car insurance up to monthly car insurance, with hourly options also available for added flexibility.”
However, he has warned temporary car insurance policies are unlikely to replace annual agreements any time soon.
He said any ‘pay as you go’ or short-term solution should be seen as a complementary add-on” and called for firms to work together to deliver more for customers struggling post-pandemic.
He told Express.co.uk: “The temporary offering should be seen as a complementary add-on to an annual policy.
“To this end, it is becoming increasingly important that all insurers and brokers work more collaboratively to offer motorists the most flexible and fit-for-purpose solution at a fair and affordable price in a time where immense uncertainty is still the order of the day.”
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Digital driveway insurance policies
An expansion of temporary cover has been the successful introduction of “temporary driveway” agreements.
These schemes cover a vehicle for a shorter amount of time such as between five and seven days.
Mr Inskip says these schemes could become even more popular as they allow drivers immediate access to their car while finding a good agreement.
Many drivers will rush through their insurance application ahead of purchasing a car where they could have saved money by doing some extra research.
He told Express.co.uk: “This takes the stress out of searching for annual insurance on the spot and provides the driver with near-instant cover.
“They can immediately drive their new car while giving them the opportunity to thoroughly research the best annual policy to suit their needs.
“It’s also an ideal solution while the car is under its money-back warranty, as the driver does not have to commit to an annual policy on a car that might be returned.
“Another benefit is there’s no risk to any existing No Claims Discount, as it’s a separate and standalone policy.”
Insurance firms have a habit of price-walking with many increasing costs each year for existing customers.
This often led road users to only settle for an agreement for one or two years before shopping around for a better deal.
However, an investigation by the Financial Conduct Authority (FCA) is set to look at ways of stopping the practice and effectively changing how the entire industry works.
Mr Inskip told Express.co.uk: “The insurance industry has an unenviable reputation of providing complicated policies that are obtained through a cumbersome and time-consuming process.
“For many customers, this means a confusing and frustrating experience.
“Even pre-Covid, there was a clear trend that brand loyalty was in decline, as modern-day consumers are no longer prepared to remain blindly loyal to any company for a long-term period.”
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