What do you lose if you buy a cheap 'essentials' car insurance policy?

Churchill is soon to launch a stripped-back car insurance policy aimed at 'customers challenged by the cost of living crisis'. 

The insurance provider, which is owned by Direct Line, is one of at least three big car insurance names to launch an essentials-type policy this year, following rivals AXA and Aviva (via its brand Quote Me Happy).

Here, we examine how these policies compare, whether they dispense with features you can afford to do without and suggest other ways you can save money on your car insurance without cutting back on cover.

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What do stripped-back car insurance policies offer?

When we last examined their cover in December 2021, we gave the standard policies from Quote Me Happy, Churchill and AXA scores of 57%, 67% and 71%, respectively, compared with an average of 65%. 

We haven't yet had the opportunity to fully assess their newer, cheaper alternatives below, but here's a look at which elements of cover have become more budget-friendly.  

Churchill - Essentials 

When it's launched towards the end of this year, Churchill's pared-down Essentials policy will offer comprehensive cover (meaning it covers damage to your car and damage or injury you cause to third parties), but it will lack the following common features:

• Cover for driving other cars 
• New car replacement (an insurer's pledge to replace your car with a like-for-like model if it's damaged beyond repair while new, rather than paying a cash settlement)
• Personal belongings cover
• Hotel expenses
• Mis-fuelling cover
• Loss of keys
• In car entertainment fitted in the car after it was made and removeable electronic equipment.

When we last surveyed Churchill customers who had claimed between October and November 2021, it was awarded a respectable customer score of 71%.

• Find out more: Churchill car insurance review

Quote Me Happy - Essentials

Quote Me Happy's Plus policy was joined in October by a cheaper Essentials policy, which can be bought both directly and through comparison sites. 

Like Churchill's, this budget policy strips out new car replacement cover and personal belongings cover.

Also missing is cover for windscreen or glass-only claims and European cover. Personal accident cover, at £1,000, is reduced from the £2,500 you'd get with the Plus version of the policy.

In our customer survey, Quote Me Happy was one of our highest scorers, with claimants awarding it 80%.

• Find out more: Quote Me Happy car insurance review

AXA Car Insurance 

Launched in February 2022, AXA's budget policy – like Churchill's – slashes protection for damage caused by mis-fuelling, key cover, and cover for onward travel and overnight accommodation costs if an accident prevents you from reaching your destination.

The streamlined policy also ditches courtesy car cover, with no provision included as standard, although you can upgrade for a courtesy car to be provided if you're in an accident. 

The policy has a £200 excess for repairs made by non-approved repairers, which its pricier sibling (AXA Plus) doesn't, and offers lower cover limits for personal belongings and personal accident cover.

AXA customers gave their provider a decent 71% in our last customer survey.

• Find out more: AXA car insurance review

Do other providers offer cheaper policy choices?

Yes. When we last surveyed 34 providers in December 2021, several – including Aviva, Hastings Direct, More Than, RAC and Saga – provided different versions of their comprehensive policies, where you could opt for more or less cover. 

• Find out more: We reviewed and rated 49 policies offered by 34 providers.

Do I lose out if I get a budget car insurance policy?

Not necessarily. Car insurance policies are built of dozens of features of cover – when we last analysed the market we rated 73 elements. These are all reflected, to some degree, in the premium you pay. 

All drivers are different, and therefore what's non-negotiable to some will be irrelevant to others. 

For example, with most policies, you won't benefit from new car replacement cover if your car is more than a year old – so the fact that this offer is missing from Churchill's Essentials policy won't be a loss to a lot of drivers. 

Similarly, the lack of courtesy car provision offered in the paired-back policies are less likely to be missed if you have easy access to another vehicle, or can otherwise keep mobile while your car's in the garage.

However, while more choice allows you to better customise your cover to your needs, it also means it's more important to check carefully when perusing the cheapest offers. Unintentionally forgoing cover for your windows and windscreens, for example, could be a decision you come to regret.

When we last surveyed car insurance claimants in October and November 2021, glass damage claims were the second most common – with 12% of respondents reporting claims involving their windscreen and windows. The most common claims were accidental damage to other parts of the car (63%).

How else can I save money on my car insurance?

You don't necessarily have to sacrifice cover to make a saving on price. Here are some other ways to secure a cheaper deal.

Haggle and switch at renewal

Our research has found that Which? members saved, on average, £56 on their car insurance by haggling with their provider and it was a process that most found easy to do. Those who didn't haggle, and switched provider instead, saved around £43 by doing so.

• Find out more: How you could still be paying more for staying loyal to your insurer

Check the channels

Your insurer could be charging you a different premium depending on how you obtained your quote. For example, via a comparison site, direct online or over the phone. 

When your renewal offer comes through, it's worth checking if the insurer is making the same cover available via these different sales 'channels'.

Amend your excess

If your insurance is pricier than you'd like, increasing the excess is one way to bring the premium down. Beware, however, that doing so places an extra financial burden on you if you need to claim, so don't set your excess to a higher amount than you could reasonably afford to pay.

• For more tips and advice, see our full guide on finding cheap car insurance.

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