Most of us use price comparison websites to find insurance, but few of us understand how they actually make their money, or why that matters. Knowing this helps you use them wisely. This guide explains how comparison sites make money in plain English, and how to get the best from them.
What comparison sites are
Price comparison websites let you enter your details once and see quotes from many insurers side by side, making it easy to compare prices for similar cover. They have transformed how people buy insurance, turning a chore of contacting insurers one by one into a quick search. Because they make shopping around so much easier, they are a valuable tool, as our guide to why shopping around still pays explains, when used with understanding.
How they make their money
Comparison sites are generally free for you to use, because they make their money from the insurers, not from you. When you buy a policy through a comparison site, the insurer typically pays the site a commission for introducing you. This is how the sites earn their income while remaining free to consumers. Understanding this commission model is the key to using comparison sites wisely, since it shapes how they operate.
You do not pay to use them
Because the insurer pays the commission, you do not usually pay anything to use a comparison site, and the price you see should not be inflated to cover it. So there is no direct cost to you in comparing. This makes comparison sites a low-effort way to survey the market. The cost is built into the wider market rather than charged to you, which is why they are free at the point of use.
Not every insurer is listed
An important limitation is that comparison sites do not list every insurer. Some insurers choose not to appear on them, or appear only on some, so the cheapest deal for you might be with a company you will not find on a given site. This is why it is worth checking more than one comparison site, and also going direct to a few well-known insurers that may not be listed, to get a fuller picture.
Cheapest is not always best
The headline price is not everything. The cheapest quote may offer less cover, higher excesses, or fewer features than a slightly dearer one, so compare what you get, not just the price, as our guide to reading your policy explains. A policy that is cheap because it covers less is not a bargain if it leaves you exposed. Always check the cover behind the price before choosing on cost alone.
Using comparison sites well
To get the best from comparison sites, use more than one, enter consistent details so quotes are comparable, and check a few insurers directly as well. Be honest in your answers, since inaccurate details can invalidate cover, and look at the cover and excess, not just the price. Used this way, comparison sites are an excellent starting point, helping you survey the market quickly before checking the detail and making your choice.
Getting quotes and your credit
Many people worry that getting lots of quotes will harm their credit score, but getting an insurance quote normally uses a soft search that does not affect it, as our guide to insurance and your credit score explains. So you can compare freely without worrying about your credit record. This means there is no downside to shopping around thoroughly, which is exactly what comparison sites make easy to do.
How results are ordered
Comparison results are usually ordered by price by default, but the ordering is worth understanding. The cheapest at the top may not be the best for your needs, and the way results are presented can influence your choice. Take a moment to look beyond the first result, comparing the cover and excess of the options, rather than simply picking the top of the list. The ordering is a starting point, not a recommendation tailored to you.
Featured or sponsored listings
Some comparison sites show featured or promoted listings, which may appear prominently for commercial reasons rather than because they are the best deal for you. These should be distinguishable from the ordinary results, but it pays to be aware of them. Judge any prominent listing on its actual cover and price for your needs, just as you would any other, rather than assuming a featured position means it is the best choice.
Add-ons and upselling
During the quote process, you may be offered add-ons such as breakdown cover, legal expenses or excess protection. Some are useful, others you may not need, so consider each on its merits rather than accepting them by default, as our guide to the excess and add-ons explains. Adding extras can quickly raise the price, so decide what you actually want rather than letting the quote build up a bundle you did not intend to buy.
Your data and being contacted
When you use a comparison site, you provide personal details and may be contacted afterwards about quotes or renewals. Check the privacy options and how your data will be used, and adjust your contact preferences if you prefer not to be chased. Being aware of this helps you use comparison sites without an unwanted flood of follow-up. Your information has value, so it is worth knowing how it will be used before you hand it over.
A starting point, not the whole job
The best way to see comparison sites is as a powerful starting point that surveys much of the market quickly, but not the whole job. Combine them with checking insurers that are not listed, reading the cover behind the price, and deciding based on value rather than the headline figure alone. Used this way, they save time and reveal options, while your own judgement on cover and the wider market completes the picture.
Used wisely, comparison sites are one of the most useful tools available to an insurance buyer, but they work best when you remember that they earn from insurers, do not show the whole market, and rank on price rather than on what is right for you, so your own judgement on cover still matters most.
In short
Comparison sites let you compare many insurers quickly and are free to use because they earn commission from the insurer when you buy, not from you. They do not list every insurer, so check more than one and go direct to some too. The cheapest quote is not always the best, so compare cover and excess, not just price. Getting quotes uses a soft search that does not harm your credit, so compare freely.
Where to get help and next steps
Read our guides to why shopping around still pays, auto-renewal traps, and insurance and your credit score. This is general information, not financial advice.