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Why has my car insurance premium risen after a claim?

Question: If I pay a motor insurance premium to cover the possibility of an accident, why am I penalised for a number of years with an increase to my insurance payments after an accident has occurred? Isn’t that what I pay a premium for?

Answer: If you’re a driver, you pay an insurance premium to cover you, and other parties, for the costs of any accident you cause (or where you are involved but fault can’t be attributed). Your insurance does not cover you against any future premium increases which may result from your involvement in an accident.

Insurers set your premiums based on how likely they think you are to be involved in an accident, and how expensive that accident is likely to be.

Since they don’t know you personally, they use statistical data about other drivers similar to you, for example who are the same age, the same gender, and who live in the same area. Young men are more likely to have accidents, so their premiums are higher, other things being equal. And if your car is particularly expensive, the cost of repairing or replacing it could be higher, again pushing up policy costs.

If you are involved in an accident and need to make a claim, however, this gives your insurer more information about you. You are now considered a higher risk to insure (as statistically, someone who has made a claim in the past is more likely to do so again in future), so your premiums will go up.
This may seem unfair to you, especially if the accident was not your fault, but it is the only reasonable way insurers can set premiums.

If previous accidents and claims had no impact on insurance costs, safer drivers (who never made claims) would have to pay higher premiums, while those who caused the most accidents would pay less than at present.

Why is my car insurance up for renewal after ten months?

Will Thomas, head of motor at Confused.com, takes on a customer car insurance query.

Question:  My car insurance has come up for renewal after just 10 months – I thought I’d signed up for a year. What’s happened?

Answer: A number of companies allow drivers to sign up for a 10-month policy, at the end of which they qualify for a full year’s no-claims bonus.

These bonus-accelerator policies are designed to help motorists who’ve recently made claims, or who have only recently started driving.

For example, by taking out three consecutive accelerator policies, you’d build up a three-year no claims bonus in just two-and-a-half years.

Can I get a car insurance refund while I wait for a replacement car?

Will Thomas, head of motor at Confused.com, takes on a customer car insurance query.

Question:  My car has been written off in an accident. The insurance company is going to pay out, but I’m not going to buy a replacement for a while. Can I get a refund of my premiums for the rest of the year?

 Answer: You can cancel your insurance policy, but it is likely that your provider will charge you an administrative fee for doing so: this is likely to be in the region of £20 to £50, but all insurers differ. Make sure this fee isn’t greater than the refund you’re likely to get. You can read more on this topic in our article ‘Make changes to your car insurance for free.’

How can young drivers cut the cost of car insurance?

Will Thomas, head of motor at Confused.com, takes on a customer car insurance query.

Question: My 19-year-old son has been quoted more than £1,500 for car insurance: we can’t afford anything like that. Is there anything we can do to make car cover (much) more affordable?

Answer: There are a few things that can bring the price down to some degree: he could opt for a higher excess, for example, or drive less miles annually.

But you could also consider insuring him on your own vehicle as a named driver for a year or two, if you don’t mind sharing the car (while selling his). You would have to remain the main driver, ie the person who uses the car most.

This would probably make your combined insurance bill a lot less, and allow him to build up his own no-claims bonus. For more tips on keeping car insurance costs down read our article ‘How young drivers can keep car insurance costs down.’

Should I insure all our cars with the same insurer?

Will Thomas, Confused.com's motor insurance product manager, answers another of your car insurance questions.

Q Will I save money if I insure all my family’s cars (we have four now my daughter’s passed her test!) with the same company?

A Not many firms offer multi-car insurance, but those that do, say it can reduce the overall cost in a lot of cases. Your best bet is to compare prices for insuring your vehicles together and then separately.

One thing to watch out for is that multi-car policies may require you to pay for the whole family’s cover at the same time every year, which could cause cashflow problems.

Do I have to tell my insurer about parking fines?

Will Thomas, Confused.com's motor insurance product manager, answers another of your car insurance questions.

Q I’m currently in a dispute with my local council about unpaid parking fines, and my car insurance is up for renewal soon. Will I have to report the dispute when I apply for cover – and will it make my premiums more expensive?

A No, insurers are only interested in criminal offences such as speeding or drink-driving, not civil issues such as parking fines or towing charges.

Should I take out breakdown cover?

Will Thomas, head of motor insurance at Confused.com, fields another of your questions.

Q: My car insurer wants me to take out breakdown cover as well as my motor policy. Is this a good idea?

A: It’s up to you to decide whether you need breakdown cover, but don’t assume you’ll get the best deal from the company which happens to provide your car insurance.

As with your motor policy, you should shop around to make sure you get the most suitable and cheapest deal available.

Read our recent article Breakdown cover: How the big names compare, which should help you make an informed choice. 

Why did I pay twice the excess I was expecting to?

Another of your car cover questions is answered by Will Thomas, head of motor insurance at Confused.com.

Q: I’ve just made a claim on my policy, and I’ve been charged twice the excess I put down on my application. What’s going on?

A: There are two types of excess: voluntary and compulsory. The voluntary excess is what you agreed to pay in the event of any claim when you made your application.

Drivers can cut the cost of cover by choosing a higher voluntary excess. But most insurance providers will also add a compulsory excess, which you can’t opt out of. Add them together, and this is the total excess you have to pay.

I had an accident in a hire car on holiday - need I tell my insurer?

We've been putting your questions to Will Thomas, head of motor insurance at Confused.com - here's the latest...

Q: I had a minor accident in my hire car when I was on holiday. I am still disputing who was to blame, but what I want to know is should I tell my UK car insurer when my renewal is due next month?

A: To be on the safe side you should probably mention it when you make the actual application – but you don’t need to disclose it on your price-comparison search when it asks whether you’ve been at fault in an accident, as this is likely to push premiums up, perhaps unnecessarily.

Once you’ve found an insurer, speak to them to see whether they need to take a hire-car accident into account. Many will not hold this against you, but it is best to come clean at the start.

Can I add a named driver temporarily?

Will Thomas, head of motor insurance at Confused.com, answers more of your questions on car cover.

Q: I’d like to add my 20-year-old son to my car insurance policy when he comes home from college at Christmas and Easter etc. Will any companies allow me to do this, or will I have to list him as a named driver for the whole year? I’m worried this would make my policy much more expensive.

A: Most insurers should allow you to add a named driver for a temporary period: as well as paying their cover you are likely also to face an administrative fee, so check what this will be in advance and compare it with putting your son on the policy for the full year.