Price comparison websites have been growing in popularity in recent years.

But the lowest price quoted may not be conducive to the best overall cover. Just last week, Aviva claimed the car insurance market is “dysfunctional” and does not reward loyal customers, tempting in new customers with prices that are “too low”, while putting prices up for existing customers.

Are insurance companies focusing too much on providing the cheapest cover in order to be competitive on price comparison sites? Below we look at the pros and cons of the sites.

The pros of using comparison sites

1) You can save money

Checking quotes from hundreds of insurers and being able to sort by price enables customers to select the very cheapest option, based on the criteria specified. Price comparison sites often include plenty of lesser-known insurers, meaning your eyes could be opened to a deal from a smaller company that saves you a significant amount of money. But the cheaper options may offer less extensive cover and potentially higher excess charges, though nonetheless provide essential cover for a lower-end budget.

2) Convenient and time-efficient

With a few clicks of a finger you can get hundreds of insurance quotes with hardly any effort at all. This allows you to gather a large amount of condensed data, saving the time of trawling through dozens of individual websites. Comparison sites also allow you to create an account and save all your details to prevent you having to repeat them over and over again when looking for different policies or wanting to switch provider. Time is money after all and is extremely valuable, so saving as much as possible is a big attraction to these sites.

3) Wide variety and choice

Price comparison sites are big businesses, and there is no shortage of ones to choose from. All of the sites ask for slightly different information and don’t all have the same insurers on their books, meaning the list of quotes given won’t cover the same companies and thus provide differing quotes. This means several can be used alongside one another to find the best deals and to validate the accuracy of the figures quoted.

The cons of using comparison sites

1) Comparison sites charge fees

The companies shown on these price comparison sites often pay a fee when they are selected by a customer. How they get paid depends on the product. Comparison sites can get paid one off fees when a customer switches provider, or when customers simply click through to a provider. For some products they are paid commission i.e. a percentage of the cost to you of the insurance policy and this can be in the region of 20%. The reason this is possible is because the charges are often less than companies would have to pay for a TV advert or other advertisements. Often it is the case that companies are not allowed to undercut the price of the comparison sites they go with.

2) Not all insurers use them

Not all companies are on price comparison websites, meaning you could be missing out on a quote from one of the more reliable companies or even the market-leaders in a particular type of insurance. As an example, Direct Line chooses not to be on price comparison sites, stating they are commercial operations rather than a public service. It also emphasises the fact that comparison should be about more than just price, as Direct Line offers other benefits such as no claims discounts for second drivers. This means that no matter how much searching you do on a comparison site, it will never show the complete picture and may mean you are not always getting the best deal.

It’s also important to consider that some comparison sites are actually owned by the insurance companies they are promoting, Confused.com for example is owned by Admiral.

3) They remove the personal touch

When you can research and buy insurance online with a few clicks, many end up with policies that weren’t quite what they wanted. Not having a direct point of contact can often be problematic for those wishing to purchase insurance, as certain exclusions and terms can leave many without cover. This contrasts to buying a policy from somebody over the phone or in person, whereby conditions can be given transparently and any questions can be asked there and then.

Jon Bannister is managing director of Bespoke Support Network