Around a quarter of comprehensive car insurance products no longer meet Defaqto’s 3-star benchmark following a strengthening of minimum standards at that level. It’s a shock move in some ways, but others might say that the binary choice of Fully Comp vs TPF&T is long overdue a revamp to something more flexible, app-based and a product that considers battery tech risks a bit more, and is on-demand so drivers can switch up, or reduce cover depending on use.
Car insurance needs to be more personalised, with risks based on real time, plus historical claims and location data, aligned to drivers specific needs, routes, passengers, even layered to traffic conditions at various locations. The tech is there inside a modern car, but insurers aren’t keen to utilise all that rich data. Final point; Isn’t it time lease losses were built in as standard rather than selling extra gap insurance?
Here’s the word;
In the newly-launched 2026 Star Ratings, 82 comprehensive car insurance products have moved from 3-star to a 2-star under updated core criteria.
Defaqto, leading provider of financial product ratings and market intelligence, said the update reflects structural shifts in the car insurance market, where tiered product suites have become increasingly common.
The strengthened 3-star core requirements are designed to ensure that products described as providing “average” cover reflect a reliable and representative level of protection.
While tiering can increase consumer choice and support price differentiation, it has also resulted in certain benefits being removed at lower levels of cover. Under the revised criteria, motor products rated three stars and above must now include core protections such as windscreen cover and personal belongings cover.
Where the majority of the market includes such features as standard, products that omit them can no longer reasonably be considered representative of average cover, according to Defaqto.
Mike Powell, Insight Manager at Defaqto, said the move was intended to ensure that the 3-star rating continues to provide a meaningful benchmark as product design evolves: “Star Ratings are designed to bring clarity to complexity. When standards in the market shift, the framework must respond. The changes we’ve made at the 3-star level protect our definition of ‘average’ in markets where tiered propositions are becoming more common.
“Strengthening core criteria ensures ratings remain meaningful for consumers and credible for providers.”
Star Ratings were first introduced more than 25 years ago. Over that period, the framework has expanded significantly. Around a decade ago, Defaqto applied Star Ratings to fewer than 7,000 products. Today, close to 10,000 product lines are assessed across more than 80 product areas spanning general insurance, banking, protection, pensions and investments.
As product ranges have become more differentiated, Star Ratings are increasingly used by providers and comparison platforms to help explain differences in cover across product tiers. Rather than directing customers toward a single outcome, ratings provide a shared reference point of product quality that helps consumers weigh price alongside the level of protection offered.
Defaqto’s Star Ratings are underpinned by one of the UK’s largest financial product databases, including Matrix 360. Nearly ten thousand products are assessed each year using defined criteria and a consistent methodology, irrespective of any commercial relationship with providers.
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