Car Insurance - Choosing An Insurer

Price is certainly a major factor when weighing up the difference between insurers and their products. But you should also look at other factors. What cover do you want? What extras do you need?

At the end of the day, 'the law of averages' indicates that just about every motorist will have to make a claim for something during their years of driving and owning a car. Even if it is just for a chipped windscreen. So you should also consider the claims service provided. That is not how well they claim to serve you - anyone can say they give a good service, nor by the terms of their charter or 'service standards'. (Is it worth the paper it is written on??) But by looking at independent surveys and word of mouth from those who have had the experience. After all, when you buy insurance you are, in effect, buying the claims service. If the service is rubbish, the policy is hardly worth the paper it is printed on let alone the premium you have paid!

When you have decided which company is best for you, for goodness sake be honest when you tell them about your driving record and history. Any convictions, previous claims, medical conditions and so on. Thanks to national computer databases, they will find you out if you are dishonest. And that means trouble.

Being economical with the truth is called 'nondisclosure of material fact' and is considered to be fraud. You are cheating your insurance company. When they find out, and they will, it will be you who pays the price.

Similarly you must be honest about who owns the car and who will drive it. If you have a 17 year old son or daughter and this person is going to be the main user - you must tell your insurer. Just adding them as an occasional user or hiding behind an 'any driver' certificate to keep the premium down is dishonest and you will get yourself into trouble.

I can tell you of a case where Mr X had a daughter, Miss Y. She owned a car and, to save some premium, Mr X insured the car in his name. Then Miss Y had an accident in the car and she submitted a claim. Upon investigating, the insurer found out she was the owner of the car and that Mr X did not even have a valid driving licence. If fact he could not drive at all! The car was a total loss. The policy was made 'void ab initio' - that means it never existed. She ended up with no car and no insurance.

Insurers views on nondisclosure vary from one insurer to another. A 'traditional' insurer who actually 'underwrites' different types of risk is more likely to let you get away with this type of trick by rewriting the terms of the policy and just charging you the correct premium in return for a claims settlement.

'Direct' insurers 'cherry pick'. They do not underwrite in the true sense. They use computers to calculate premiums from set rules. This is another method they use in addition to cutting out the middle man to get you a cheaper policy. So if you bend the truth and no longer meet the rules, you will pay a higher penalty when you are found out. The example given above is from a 'direct' writer. The simple answer is - don't even try it!

The same applies to renewal. Insurers want to keep good customers (those that don't make claims). So when your policy expires they will make renewal an attractive offer to try and keep your business. When you renew you must be as honest as when you first purchased the policy. You are, in effect, buying a new policy each time you renew. If you have had a conviction for speeding during the year you must tell them. They might offer the same renewal, they might add terms. But if you fail to tell them that is nondisclosure again and the consequences are the same as before.

Should you shop around or stay with the same insurer? Shopping around could save you a few pounds. But be sure of the cover you are buying. Look carefully at the cover and the benefits you need. There is no point buying cover you don't need but there is every reason to spend a little extra on the cover you do need. If there is only a few pounds in it and both cover and service appear to be equal, I'd stay put if I were you. You can still build up valuable 'good will' with your insurer by renewing with them year after year. Any claims problems will find a more sympathetic ear from the claims manager if you are seen as a good, long standing customer.

I've mentioned before the importance of giving all information to your insurers when you take out a new policy or renew an existing one. Usually the information they require is provided by way of questions on a proposal form. This is the document that will be used as a basis to reject your claim if you have not been truthful on it. Strictly you are required to tell them absolutely everything you know about your driving history and car.

But in practice, you will only have to tell them about those matters they ask questions on. Whilst most telephone based insurers issue completed proposal forms, more and more and now turning to call recording. Here, they no longer require a completed proposal form but instead require you to be honest whilst answering questions on the telephone. They record every telephone call and if there is disagreement as to what was said, can relocate the recording and use this as evidence if you are untruthful.

Indeed, those that review disputes between consumers and insurers, such as the I O B, are keen on call recording. They can hear precisely what questions were actually asked and how they were answered. This is no doubt the way forward until the Internet totally takes over the transactions of insurance.

Next..... Making A Claim On Your Car Insurance