Latest Car Insurance News...
Speed awareness courses have hidden cost
Motor insurer Admiral has revealed that it treats people who've been on such a course as having committed a speeding offense, in the same way as if they'd taken the points and fine. That in turn will usually push up premium quotes. Admiral, which owns several smaller specialist firms, reportedly insures almost one in ten UK drivers.
The revelation to the BBC comes in stark contrast to claims made by many police authorities that attending such courses will not affect premiums. For some drivers that may well be a deciding factor in choosing to attend.
Police officials say they fear insurers changing prices in this way could deter people from going on the courses, which in turn could reduce the chances of them changing their driving habits. Some police authorities have now been forced to remove statements on their sites that the course won't lead to premium hikes.
The AA went even further, saying Admiral's policy was completely self-contradictory as it missed an opportunity to encourage safer driving and thus reduce the insured risk.
Admiral maintains that putting up prices is the only logical way to proceed because its statistics show drivers who've...
Motor insurer takes it day by day
A specialist motor insurer is now offering policies that cover learner drivers for as little as a single day.
The theory behind Dayinsure's policies is that many learners find the cost of lessons mean they need to practice as much as possible in between sessions. While they can do so in a friend or family member's car, the car owner will need to extend their insurance policy to cover the learner.
Given the increased risk of a crash, that can be extremely expensive, particularly considering most policies can only add an extra driver for an entire year, even if the learner only needs to access the car now and again. Meanwhile people who run company cars will often find it impossible to add a learner driver to the policy.
At least one specialist insurer already offers learner driver cover by the month. Dayinsure says it wants to be even more flexible, offering policies that run as little as one day. The cover certificates are issued instantly via e-mail, meaning its possible for a learner to arrange to go out for a drive in somebody else's car with virtually no notice.
The policies, which are offered in partnership with Aviva, do have several...
Car insurance costs drop
It's sometimes seemed as if only three things are inevitable: death, taxes and car insurance price hikes. But the AA has revealed that between July and September this year prices actually fell.
Its regular Insurance Premium Index survey of prices found an average drop of 2.9% to £870 for fully comprehensive policies direct from insurers. Meanwhile price comparison site quotes are down 1% to £612.
Both these drops are compared to the April-June period. In a direct comparison to the same period last year, direct insurer quotes are still up 6%, though price comparison site premiums are down a fraction.
The AA believes the figures show stiff competition in the market is finally overcoming the fact that costs to insurers are constantly increasing, particular the expense of paying for personal injury claims.
The price cuts could be shortlived for some drivers however: females, particularly younger drivers, face a price hike if renewing after 21 December when new EU rules come into force that ban insurers from charging differing prices solely on the ground of gender. Most analysts expect the result to be mainly an increase in prices for women rather than...
ABI targets younger drivers
The Association of British Insurers is calling for legal restrictions on young drivers to help bring down premiums.
The industry body says the actions are needed because young drivers are more likely to crash, more likely to cause injury to multiple passengers, and more likely to make particularly expensive claims.
The ABI recommendations come from an examination of driving laws around the world. It wants the age people can start driving lessons reduced by six months to 16 and a half, but a minimum period of 12 months from starting lessons to getting a license. The proposals would also mean drivers couldn't qualify having only taken an intensive driving course.
The group also wants special restrictions in the first six months after a youngster passes their test. During this time they'd only be allowed to carry a limited number of passengers, would have a drink drive limit close to zero, and would not be allowed to drive between 11pm and 4am unless for work or education-related purposes.
The suggestions have met with a poor response from newspaper website commenters and seem to have little chance of coming in to law. Some have suggested the insurers should instead band together and make the...
Motor insurance scandal leads to major investigation
The Competition Commission is to carry out a full-scale investigation into claims that motor insurers have colluded with repair firms to rip off customers.
After its own initial probe, the Office of Fair Trading announced it was referring the case to the commission, which has the power to impose fines or force companies to change their behaviour.
The investigation will centre on the way motor insurers often control how and where a car is repaired after a crash. Insurance firms allegedly receive referral fees from repair firms for passing business their way. This bumps up the costs paid by the insurer of the at-fault driver and in turn drives up premiums. It's also claimed that some repair firms have deals with insurers to charge higher fees than if a customer was paying directly for the work.
Similar allegations have been laid at the hire car industry, with claims of inflated costs when insurance is paying the bill to provide a courtesy car, and even a suggestion that some insurers book a car for longer than is actually needed to bump up revenues for the firm. In both cases insurers allegedly receive a cut of the extra...
Moneysupermarket front man busted for insurance breach
A comedian who advertised an insurance comparison site has received a six month driving ban for having invalid insurance.
Omid Dijalili appeared in an ad for Moneysupermarket in which he encouraged drivers to overcome their shyness of haggling by using the comparison sites to get a better deal.
Embarrassingly he received the ban, along with a total of £2,900 in fines, after a single journey created a string of breaches. Dijalili rode a moped in a cycle-only lane in London and was stopped by police. The moped was impounded when it emerged he had 12 penalty points on his license.
Although at that stage Dijalili had not received the standard driving ban for hitting the 12 point mark, doing so automatically invalidated his insurance. To make things worse, his driving license had already expired.
Dijalili, who is reported to have received a total of 36 penalty points in his life, says he will contest some of the points that brought him up to the 12 point threshold. He'll also appeal against the ban because he believes using public transport puts him at risk of...
Small cars "Dangerous" claim dangerously flawed
American motor insurers have revealed that smaller cars may be more likely to lead to injuries through a crash. But there may be a flaw to the logic.
The study, by the American Highway Loss Data Institute, has been covered as if it shows the likelihood of a crash leading to injury. In fact the figures simply show what proportion of insured drivers made an injury claim at all. The figures don't take into account how many of the drivers had a crash or what the split was between crash victims who had an injury and those who escaped unharmed.
The figures showed a wide disparity with 2.7 percent of insured Toyota Yaris drivers claiming for personal injury compared with 0.45 percent of Porsche 911 drivers. Another problem there is that the methodology doesn't take any account of whether Porsche drivers use their cars less often, or whether Yaris drivers are more likely to driver in busy traffic areas rather than open roads.
The study did note there was a wide variation in the average cost of damage to a particular model of car in a crash, even taking into account the fact that cars vary so much in price....
One millionth uninsured vehicle taken off road
A car belonging to an uninsured driver was seized in the West Midlands this week. What makes that noteworthy is that it's the one millionth such seizure since police received the power to do so in 2005.
Since then officers have been allowed to stop vehicles as soon as they are identified as being uninsured. That's made possible by using automatic number plate recognition technology linked to a national database of all motor insurers.
Over the seven years that averages at just under 400 seizures a day, though the current rate is around 500. Almost a third of seized cars are later destroyed.
The AA welcomed the milestone but warned that an estimated 1.2 million uninsured vehicles are still on the roads: around one in 25 of all vehicles in use.
The costs of the national database equate to around £33 a year extra on the average motor policy, though without the seizures it's extremely likely that policy costs would be much higher. That's because insurers already allow around £25 to £30 from every premium to cover the risk of being unable to recoup costs because another driver in a crash in...
New smartphone driving app could cut car insurance premiums by 20%
An insurer says a smartphone app could cut premium costs by 20%. But the app isn't for price comparisons: instead it measures safety.
The RateMyDrive application works in the same way as "black box" schemes but doesn't require specialist equipment. Instead it takes advantage of smartphone accelerometers, the small component that measures movement and is used in games that require the user to tilt the screen.
Customers at Aviva who have an Android handset are being invited to take part in a trial of the software. Eventually new customers will be able to use the app to measure their acceleration, braking and cornering during 200 miles of driving. Those who meet a set safety level will qualify for a rebate of up to 20% depending on their driving performance and their original premium cost.
Drivers who "fail" the assessment won't get any rebate, but won't be penalised and will continue to be covered by the insurance.
An Aviva spokesman said the system will be fairer for good drivers than simply relying on demographic information: "The premium will be for you, not people like you."
Not everyone is convinced by the idea....
No claims loophole could hurt motoring policy-switchers
A major flaw in the way insurers deal with no-claims bonuses could mean millions of drivers are paying too much. That's the claim made by Auto Express, which made the discovery when checking up on a complaint by a reader.
The problem stems from the limits on how many years a driver can go without making a claim and still get additional discounts. After this limit, additional claim-free years don't lead to any further premium drops. While this limit is typically five years, the figure varies from company to company: an Auto Express survey found a range from four years to 20 years.
When switching from a company with a higher limit to a lower limit, this isn't a problem. For example, if a customer from insurer A with a five year limit gets a quote from insurer B with a four year limit, the quote will include a discount based on four years without a claim.
The problem is when the change is the other way round. If a customer from insurer B has been five years without a claim goes to another firm, insurer B will only verify that they've reached its four year limit. This means that even though...
Motorists warned to check foreign breakdown cover
More than 1.6 million Brits could be making a potentially-costly gamble by driving abroad without adequate breakdown cover.
Britannia Rescue surveyed drivers and, if their findings hold up across the population, around 4.27 million people are planning a drive on the continent this year -- in many cases hoping to find more reliable sunshine without the financial burden of long-haul flights.
The problem is that 39% of those questioned appeared to have been set to do so without breakdown cover. That's made up of 23% who've simply not thought about it, 7% who wrongly believed their UK breakdown cover applied on the continent, 6% who mistakenly assumed they were covered by their motor insurance policy and 3% under the incorrect illusion that their travel insurance would do the job.
Of course, some domestic motor, breakdown or travel policies do cover taking a car abroad, while others will allow this for an additional fee, but it's vital to check rather than make assumptions.
According to the Mirror, an average of 100,000 British motorists break down abroad each year. Not only does that mean splashing out for repair costs, but if the car can't be fixed on the spot, it can cost more...
Motor insurance breaks thousand pound mark
The continuing steep rise in car insurance costs has finally led to the inevitable milestone: the average cost of a comprehensive policy now exceeds £1,000 a year.
The figures come from the AA, which measures the cheapest policy on offer across all insurers for each of a variety of driver types. It puts the overall average at £1,034, up 8.5% on last year. In reality the "average" driver could be paying even more if they don't shop around.
Young drivers continue to be the hardest hit, with the average 17-22 year old male being charged £2,792. Prices for young women are also up at £1,995, and in theory the price divide between the sexes should disappear completely once new European rules banning price discrimination on gender grounds take effect.
There's also still a distinct regional divide: Manchester and Merseyside were most expensive at £1,648, while Scottish motorists pay just £727.
Simon Douglas of the AA said that as well as the ongoing problems of expensive (and sometime bogus) personal injury claims, prices were being pushed up by fraudulent applications. He said this may be tackled by allowing insurers greater access to data held by the...
Motor insurance hit squad gets easy start
A new police unit designed to catch motor insurance scammers has secured its first conviction. John Machin was caught after an embarrassing phone blunder.
The case was the first courtroom success of the Insurance Fraud Enforcement Departments. That's a special police unit that was set up in January and deals exclusively with insurance scammers. The unit is funded entirely by the insurance industry rather than the public purse. It has so far made 135 arrests, most of which had led to ongoing investigations and prosecutions.
While investigating cases and bringing them to court is normally a lengthy process, the Machin case didn't prove too taxing to be fair. He reported the claim to his insurer in a call that was recorded and has now been released to the media. Unfortunately for Machin he didn't put the phone down properly at the end of the call and was heard to tell a friend "I will make you a very very rich man" and then discussing making a similar fraudulent claim, this time saying two cars had been involved.
Machin was given a 12 month suspended sentence and a community service order. A police spokesman suggested he would likely have faced a longer sentence...
Record motor insurance claims could mean premium hikes
The number of people claiming to have suffered personal injury in car crashes has risen sharply despite a fall in the number of crashes.
The Institute and Faculty of Actuaries reports that there were 11% percent fewer crashes in 2011 compared with 2010, largely because people are less able to afford to drive as much. However, the number of personal injury claims is up by 18% (the biggest ever annual rise), while the average payout for a crash has risen nine percent.
According to the Institute, there may be validity in the idea that "ambulance chasers" are to blame. It notes there are more claims in areas where claims management companies are based, particularly in the North West.
It also said that the proportion of crashes that result in a personal injury claim is now higher in these "hot spots" than the worst locations in the United States.
All told, the industry is likely to face an extra £400 million in claims each year. If passed on to customers, this cost would mean an average of just over £10 extra in premiums each year per...
Losing your job could increase your car insurance premiums
Losing your job could increase your motor premiums by 400%, and you might not even be able to get cover at all. That's the shock claim of Money Mail, which commissioned Money Supermarket to examine the issue.
At first glance, the figures make little sense as people on low incomes might be expected to drive less often given the rising cost of motoring. However, insurers appear to believe four factors come into play when somebody loses their job:
- they are more likely to drive during the day rather than just commuting;
- they are less likely to pay for regular repairs and servicing and thus increase the chances of a crash;
- they are more likely to be tempted to make fraudulent claims;
- and they are more likely to be unable to make scheduled premium payments.
Another significant issue is that because insurers group working people by job when assessing risk. Unemployed people are left in a much larger, more diverse pool that doesn't reflect risk as accurately.
One insurer said his firm would continue offering insurance to existing customers who become unemployed by basing premiums on their previous job, but...