Insurance packages offered by car manufacturers can  be up to 26% more expensive than going to an underwriter. Although it may seem tempting to opt for the ‘on the spot’ insurance deal, so that you can instantly drive your new car straight off the forecourt, it is best to shop around for a better deal.  

According to uSwitch.com manufacturer's car insurance is marked up by an average of 10% of £30. Some manufacturers charge almost 26% more for their cover. It says car manufacturers are making £15 million each year with this type of mark-up.

uSwitch.com found that insuring a new Astra 1.9 CDTi with Vauxhall costs an average of £316.05. However, insuring it with RBS Insurance for example, would costs £287.70.

"Motorists tempted to opt for ‘on the spot’ manufacturer insurance must be warned that unless they are getting a full year for free they will be paying more than they need to for their cover,” says Ashton Berkhauer, car insurance expert at uSwitch.com. “This is good news for the manufacturer's profits, but bad news for motorists pockets.  However, it's very easy to avoid, motorists simply need to shop around to make sure they pay the lowest price for the level of cover they need. Insurance through the manufacturer rarely comes with any extra benefits, just an extra cost unless it's completely free.”

However if the car manufacturer’s insurance is offered free of charge it is obviously worth considering. But warns Ashton Berkhauer: “Make sure you fully understand the policy before signing on the dotted line. Consumers need to check that the voluntary excess is not unreasonable so they won't be stung if they come to make a claim. Most importantly, they should make a note of their renewal date so they don't get stuck with the same insurer after the free cover expires.."