Did you know if someone damages your car, your premium could rise too?
In the world of insurance, if you hit my car and drive off, I’m at fault and it’ll cost me in higher premiums. Even if I pay for the repairs myself rather than claim for them, my premium will still rise by 15% if I’m with Esure, for example.
Several Which? members got in touch recently to tell us their premiums had leapt following an incident that wasn’t their fault. One member’s quote jumped by £300 to £1,100 after she mentioned a claim for a chipped windscreen.
Increased insurance risk
Insurers consider any incident indicates a greater risk of future claims, but we decided to test how much 12 different insurers would add to their quotes if you told them about an incident where you were not to blame.
The biggest premium hike in our test was Esure’s. It added 39% when we said someone had scraped our car when it was parked, and we’d made a claim against the insurance. But LV added nothing. We found the average rise was 22%.
While the quotes varied hugely, so did the way insurers asked the questions before quoting and the extent to which they explained important facts and terminology. And there is plenty of terminology to explain.
Insurers consider you ‘at fault’ unless they’ve been able to recover the cost of a claim from elsewhere (usually the other driver) after an incident. Fault has nothing to do with who was to blame and everything to do with where the money comes from. Of course most people don’t know this – that’s four in five, according to our survey. Why should they, unless it’s clearly explained? But this is an industry where explanations are not easy to come by.
Premium prices
Insurers are notoriously cagey about the factors behind an increase in your premium. I tried this recently with mine, and got the longest non-answer I’ve heard for some time.
One bit of information conspicuous by its absence has long been the premium you paid last time around, which you naturally want to know when you’re about to renew. Which? has called for insurers to show the previous year’s premium on renewal notices for years, and the Financial Conduct Authority has just announced that companies must implement this by 1 April next year.
This reasonably straightforward reform has moved at the pace of a distracted snail. But there’s nothing to stop insurers getting on and putting last year’s premium on their renewal letters now – indeed at least one, Axa, already does it.
It’s high time the rest of the industry did so, too, rather than waiting for yet another half a year to pass while premiums quietly rise for reasons that customers don’t really know.
Over to you
Are you paying premium prices for your car insurance? Have you noticed your car insurance jumping up in price after a claim that wasn’t your fault?
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