Why is my renewal quote for car cover higher with LV= than ABC?

I received a letter from my insurer, LV=, three weeks prior to the renewal date of my car insurance. The price had risen from £513 to £600.

When I called, LV= offered me a nominally smaller premium – but I decided to use a price comparison site to find a cheaper insurer.

I found a quote from ABC insurance for £389 a year and decided to switch.

However, when I delved further into the company, I discovered ABC is a part of LV=. 

How can the quotes be so different when they are both under the same umbrella? Mr R, via email 

Grace Gausden, This is Money, replies: You weren’t surprised when you received a renewal quote from LV= and the price had increased. You say this happens every year. 

However, this year, you weren’t ready to accept the higher cost and decided to take action.

You asked LV= why the prices had increased and received a generic answer saying market conditions were the reason. 

Not satisfied with this, you decided to use price comparison websites to see if, and how much, you could save by switching. 

When you found the quote from ABC Insurance, you were shocked that you could save 35 per cent of your annual cost by moving.

But you were more surprised to learn that ABC is a part of LV= – as stated on the LV= website.

You wrote to LV= to question why the prices were so different, even though they were essentially the same brand.

It took a while for you to get a response from LV= as it said that it doesn’t usually reply to written letters, only emails.

However, the managing director did write back eventually, saying that although under the LV= banner, ABC is in fact its own brand that follows a different pricing structure to LV=.

The response added that ABC is available exclusively through brokers such as Swinton, as opposed to LV=, which is available directly through its site.

A spokesperson for LV= replies: We’re sorry that Mr R feels let down by LV= General Insurance and decided to cancel his direct policy with us. 

Despite the fact that ABC is a brand under the LV= umbrella, the policy he has purchased is not the same as the one he had previously. 

The policies have different terms, cover levels and fundamentally different pricing criteria. 

The products are not directly comparable, and therefore the prices are showing a difference.

For example, Mr R has opted for a higher voluntary excess on the ABC product, which would also affect the premium paid.

Dan Hutson, head of motor at Compare the Market, replies: Insurers have a range of policies to suit individual customer needs. 

When you’re looking to switch car insurance provider, it’s important that you check that the policy is right for your situation. 

The price that someone could pay is dependent on a lot of different factors, including the underwriter of the policy and the individual risk of the driver. 

Shopping around could mean that you’ll be able to find a great deal for the policy that you need.

Grace Gausden, This is Money, adds: Whilst you may not have received an immediate satisfactory answer as to why the pricing structure is different, you did still save a lot of money on your insurance. 

This is an example of how switching helps ensure you are not falling victim to the loyalty penalty, which penalises customers for staying with their providers, while maintaining the best deals for new consumers.

Using price comparison sites is a good start to finding a better deal and, as you realised, customers could save hundreds of pounds a year by receiving new quotes and switching providers.

In fact, Uswitch says that 51 per cent of its customers who use its switching service with Confused.com could pay £600 or less for car insurance. 

Customers can save money not only on car insurance but energy bills, broadband costs, TV contracts and mobile charges.