Motorists are on average being required to pay almost a third more on their car insurance if they have had a no-fault claim made against them in the past, irrespective of the circumstances the claim was made and whether the driver was guilty of any wrongdoing at all, an AA study has revealed.
The AA conducted a mystery shopping experiment that gauged the effects of a motorist having a claim made against them on the quotes given to them by insurers. And compellingly, they found that drivers who had made a single no-fault claim on their cover were given quotes that were 30% higher than standard premiums by a plethora of smaller insurers, whilst motorists with two no-fault claims were usually charged between 10% and 50% higher than someone with none against their name.
“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 Ian Crowther.
Of the drivers with a single no-fault claim against their name, around 60% of insurers attached no loading to the premium, 35% placed an average loading of 5% whilst 5% of smaller insurers attached a 30% loading on top of their premiums.
Similarly, of the motorists with two no-fault claims against their name, about 5% applied loadings as high as 10%, 91% applied loadings spanning between 10% and 50% whilst just 4% did not charge a higher amount.
“One insurer applied a loading of nearly 300% but that is extreme and may be an anomaly,” says Crowther.
When questioned on the nature of the evidence, insurers argued that premiums for people with no-fault claims against them were higher because it was implicit that they were more prone to having another accident in the future, irrespective of whether they were at fault for the claim or not.
Adrian Webb, a spokesman for insurer esure, said: “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 didnít directly address esureís disclosures on why premiums are higher for motorists with no-fault claims but did divulge into the complex system that insurers utilise when determining the value of an applicantís quote.
“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 said.
“There might be 13 core factors, each of which has a hundred variables giving over 39 decillion permutations of risk for us.”
No claims bonus
.Another factor cited by insurance companies for why motorists with no-fault claims are typically given higher quotes was the no claims discount that most pay out to applicants who have had no history of accidents in the past 5 years.
The NFU Mutual typically offer protection on no claims bonuses to users which mean that even if a claim is made, that the renewal cost will be lower than someone who does not have it protected.
Stuart Marston, motor pricing manager at NFU Mutual said: “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 is the case even if the claim was not your fault; if the person at fault admits responsibility and you claim with the protected insurance then your premiums will be left unaffected.
Direct line reiterated the value of users protecting their no claims discount, calling for people to do so in order to keep the costs of their premium down.
A spokeswoman for Direct Line says: “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.”
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