Mystery shopping exercise reveals motor insurers charge up to 50% more for driver with two no-fault claims. As if someone crashing into the back of your car isn’t annoying enough, finding that you are being charged almost a third more for car insurance as a result is likely to provoke road rage in even the calmest of motorists. A mystery shopping exercise by the AA found that drivers who declared they had previously made one no-fault claim on their cover were quoted 30% higher premiums by a small number of insurers, while those with two no-fault claims to declare were typically charged between 10% and 50% more than those with none.
The motoring group posed as a driver and used price comparison website Compare the Market to get quotes. “We compared a driver with no no-fault claims with one having suffered one no-fault claim and one who had suffered two no-fault claims,” says AA spokesman. With one no-fault claim, approximately 60% of insurers applied no loading to the premium at all, around 35% applied an average loading of 5% and approximately 5% applied an average loading of about 30%.
With two no-fault claims only 4% of insurers did not charge more, around 5% applied loadings of up to 10% and the rest applied loadings ranging from about 10% up to 50%. “One insurer applied a loading of nearly 300% but that is extreme and may be an anomaly,” says Crowther. In the test a Nissan-Juke owning 40-year-old data analyst living in Gloucestershire with a full no-claims bonus was initially quoted £202.98. Although there was no premium rise for one no-fault claim, the premium rose to £226.55 with two.
Insurers say the reason premiums rise is that statistical evidence shows that drivers involved in an accident, whether or not they are directly at fault, are more likely to be involved in another accident later on. Adrian Webb, a spokesman for esure, says: “In many cases no-fault claims can be a proxy for the environment in which you drive. For example, you may drive through certain awkward junctions, an accident blackspot, or be in a certain postcode that suffers from poor signage, all of which puts drivers at risk.”
Webb wasn’t keen to divulge too much about esure’s criteria for grading accidents and judging risk, but did reveal its complexity. “All insurers use statistical loss data in which people are grouped into pools of risk: for example, ‘men in late 40s’, ‘Volvo drivers’, ‘live in a city’. They then use an algorithm, to analyse and weigh the different data and avoid double counting,” he says. “There might be 13 core factors, each of which has a hundred variables giving over 39 decillion permutations of risk for us.”
Unfortunately, the claim will remain with you long after the respray has started to fade, as most insurers will ask customers for details of claims going back between three and five years, irrespective of fault.
This is perhaps one reason why some drivers often don’t report minor incidents, although the Association of British Insurers (ABI) strongly advises that any accident is reported to your insurer, whether or not you intend to claim. Malcolm Tarling of the ABI says: “It puts your insurer on guard as the other party could always change their mind and claim for a whiplash injury.” If switching to a new insurer before the cost of a claim has been settled you should also disclose all details of the pending claim. Once it has been resolved, you should then update your new insurer.
Insurers offer varying discounts to those who have not made a claim for five years or who have protected their bonus, known as a no-claims discount (NCD). They also have different approaches to those who have claimed, so it makes sense to check directly with a number of insurers.
Some will say if your NCD is protected and you have a claim, your renewal price will be less than it would be if you did not protect your NCD. “If you make a claim and have not protected your NCD, this may have an impact on any NCD you’ve built up, although you may not necessarily lose all of your discount.” This applies even if the claim was not your fault; if the other party admits liability and you claim through their insurer instead your NCD not at risk.
Another spokesman said: “Customers who have protected their NCD may see their premiums rise as a result of a claim at renewal, but they would retain the number of NCD years they had earned up to that point and would therefore continue to benefit from a higher premium discount.”
NCD protection typically allows for two at-fault accidents in any one year, or a maximum of two fault claims in three policy years.
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