REVEALED: The sinister ways your car insurer is trying screw more and more money out of you – and the foolproof way to fight back when they try to jack up your premiums, by JEFF PRESTRIDGE
We all rely upon insurance companies to sell us effective financial cover against misfortune. It doesn’t come cheap, but for the most part insurers do a good job paying claims promptly. Yet sometimes their actions don’t paint the industry in a terribly good light.
I was reminded of their flaws last week when I spoke to Wayne Aaron, 57, boss of chemicals company Texchem UK in Rochdale.
Wayne is ‘salt of the earth’ and very much my kind of person: a hard-working employer who battles on despite everything that Labour throws at him (most notably, higher national insurance bills). His wife Jo, 56, is the company’s office manager.
He is mighty proud of the fact that his company’s chemicals, used across the textiles industry to make its products flame-resistant and hygiene-friendly, are in demand in China.
‘My business breaks the mould,’ he told me. ‘We export to China rather than import its products.’ Wayne flies the flag for the UK. Yet it is his bewildering personal experience with insurer Admiral that he wanted to talk about.
Like many financially astute motorists, Wayne always shops around when his cover is up for renewal. Invariably, he finds a better deal elsewhere.
This year was no exception – the annual cover for his BMW Series 3 runs from January to January – but the experience has not left Wayne feeling particularly enamoured by the way he has been treated.
His search for cheaper cover on a comparison website started well with a £485 quote from Admiral – £115 cheaper than his existing RIAS policy.
It was reported last week that there had been a 13 per cent reduction in the average cost of car insurance over the past year
But when he went to purchase the cover, his payment was declined, with Admiral asking him to contact them.
The insurer told him that the quote was now invalid as a result of an accident that Jo had been involved in some four months earlier – an incident Admiral had found details on by trawling an external claims database.
Wayne was taken aback. He says: ‘Jo was driving her own car, a Mini Cooper, when the accident happened, and it was insured through Quote Me Happy, a brand owned by Aviva. It had nothing to do with me.’
To rub salt into tender wounds, the accident was not even Jo’s fault – someone drove into the back of her car after stopping at some traffic lights.
‘The damage was minimal,’ explains Wayne. ‘And the other driver had accepted responsibility straight away.’
Given that the damage was limited, and not wishing to trigger a claim on his cover, the offending driver offered instead to pay for the repairs.
Jo agreed and, as required, told her insurer about the accident.
The reason why this incident triggered Admiral four months on to withdraw its £485 offer of cover for Wayne is because Jo is a named driver on his policy.
And though the accident that she was involved in didn’t trigger a claim on her policy, Jo’s call to Aviva meant it was automatically clocked as a ‘non-fault’ accident.
This meant it appeared on the database of the Claims and Underwriting Exchange, which all insurers use to check whether customers or wannabe customers have been involved in any incidents which may or may not have led to a claim.
Though a non-fault accident, as in Jo’s case, doesn’t always trigger a claim, it’s invariably used as an excuse for insurers to jack up premiums.
The reasoning (which I find incredibly flimsy) is that anyone involved in a non-fault accident is more likely to be involved in another incident in the future.
In other words, in the minds of profit-conscious insurers, they represent a greater insurance risk and so must pay more for cover.
This is exactly what Admiral did in light of Jo being a named driver on Wayne’s policy.
Showing him details of the incident noted on an ‘external claims data base’, (it wasn’t a claim), Admiral revised its price upwards – from £485 to £546.
Insurers target anyone involved in a non-fault accident to jack up premiums as they are, in their belief, more likely to be found in another incident in the future
Understandably, Wayne was furious. He says: ‘I’ve no points on my licence, never had a conviction, and have a no claims bonus stretching back more than 15 years. It’s crazy that a non-fault claim that didn’t trigger a claim on my wife’s insurance should impact the cost of my cover.’
All motor insurers require you to inform them of any accident in which you are involved, irrespective of whether it does not trigger a claim, as in Jo’s case. That’s understandable.
But it seems morally wrong that insurers are now using this requirement to screw more money out of customers like Jo (and indirectly Wayne) who report a non-fault accident without any intention of claiming.
They do it because they are good citizens. They also do it in spite of the fact that it would make better financial sense for them to keep schtum, preventing their insurer from increasing the cost of their cover on the basis of a non-fault accident.
Thankfully, Wayne has had the last laugh. After receiving the new £546 quote from Admiral, he searched again for cover, but this time using a different comparison website and declaring Jo’s ‘non-fault claim’.
Again, Admiral came out top of the pops, but this time with a price of £510 rather than £546. Wayne snapped it up in a flash. Poetic justice, I would say.
On Friday, Admiral said that ‘customers with non-fault claims or incidents are more likely to make a future fault claim, hence the increase in premium’.
It’s that time of the year when many motorists and homeowners receive renewal notices for the 12 months ahead
A renewal notice is just the starting point
Talking of insurance, it’s that time of year when many motorists and homeowners receive renewal notices informing them how much cover will cost them for the 12 months ahead.
Insurance prices, it seems, are falling. For example, comparison website confused.com reported last week a 13 per cent reduction in the cost of car insurance over the past year, taking the average premium down to £726. This followed Pearson Ham (pricing consultants) reporting a 12 per cent cut in home insurance premiums.
Yet lower insurance prices don’t necessarily mean reduced renewal premiums, as confused.com highlighted in its report on motor cover.
A survey it commissioned last month shows that 42 per cent of drivers are still being hit with higher renewal prices.
It’s the very point retired administrator Alan Ford made to me last week. His home insurer Saga has just sent him and wife Valerie a renewal notice for the three-year fixed price cover they have for their three-bedroom home in Royston, Hertfordshire.
It wanted to up the annual premium by 136 per cent – from £261 to £615. ‘I wasn’t having it,’ Alan told me. ‘We’ve never made a claim in the time we’ve been with Saga.’
He did what everyone in receipt of a renewal notice should do. First, he gave Saga what for, resulting in a new premium of £495. His response: ‘Why didn’t they offer us that premium first-time round?’
Secondly, and more crucially, he shopped around for alternative cover. The result was a one-year policy with Aviva for £193. ‘Well pleased,’ is Alan’s verdict.
The message is clear. Use your renewal notice as no more than a starting point. Like Alan, play the field and save a fortune.
