Motor Insurance
Last updated:
21/02/2011 11:30
Motor insurance
The information below covers the frequently asked questions about obtaining motor insurance.
Many charities representing people with particular needs have arrangements with specialist insurers, brokers or financial advisers who may be able to help you find suitable cover. Alternatively, the British Insurance Brokers Association runs a find a broker service which can put you in touch with specialists; similarly, unbiased.co.uk can help you identify independent financial advisers in your local area.
Age
A person’s age is an important factor in helping motor insurers to determine the level of risk they pose. Evidence demonstrates a strong link between a person’s age and the likelihood of their needing to make a claim.
Young drivers
Compared to more experienced drivers, young drivers:
• Are almost 10 times more likely to be killed or seriously injured than more experienced drivers
• Are almost 5 times more likely to be involved in a road traffic accident involving a casualty than more experienced drivers
• Are more than twice as likely to make an insurance claim
• Cause more expensive claims (more than three times greater, on average).
This is why young drivers often pay higher premiums than other drivers.
However, there are measures that young drivers can take to reduce the cost of their premiums. They include:
• Driving a car with a smaller engine
• Agreeing to higher excesses
• Taking advanced driving qualifications, e.g. Pass Plus
• Driving safely (points on your licence will increase the cost of your cover
• Shop around.
Older drivers
Conversely, older drivers also make more claims than other drivers.
• Older drivers have more accidents per mile driven than middle-aged drivers, and they are more likely to involve injuries to other road users
• The average claim cost for a driver aged 80 is almost 50% higher than that of a 60 year-old
• Driving skills tend to deteriorate over time, so recent driving experience is a less relevant risk fact as drivers get older.
There is a competitive insurance market for older drivers. The ABI Motor Insurance Guide for Older Drivers provides some helpful tips on how to find cover at the best possible price with all the protection they need.
Bankruptcy and credit scoring
Bankruptcy, and credit scoring more generally, can be an indicator of risk and evidence shows that it is predictive of claims experience. Information collected by reference agencies to determine a credit score will typically include details of county court judgements (CCJs) and bankruptcy. As such, some – but not all – insurers use credit scores as one of several rating factors to determine risk, and a poorer credit history is likely to lead to a higher premium.
Convictions
Unspent convictions may be relevant to an insurer. Unspent convictions are defined under the Rehabilitation of Offenders Act 1974 and need to be disclosed to your insurer. The Act sets out rehabilitation periods based on the length and type of sentence imposed. Once the rehabilitation period has passed, the conviction is deemed ‘spent’ and therefore does not need to be declared to your insurer.
While it may not be immediately obvious to customers why a conviction is relevant, an insurer’s approach to pricing risk is based on their claims experience over many years. Evidence shows that unspent convictions can indicate the likelihood of making a future claim.
It is common practice for insurers to only take into account offences that are relevant to the type of cover, such as motoring offences for car insurance or arson and offences involving dishonesty for household insurance. It is important to declare all unspent convictions if you are ever in doubt. If a conviction is not relevant to an insurers’ approach to rating risk, it will not be taken into account.
UNLOCK (the National Association of Reformed Offenders) has published the following guides to help consumers buy the right insurance and make sure they are treated fairly when disclosing convictions and related offences. Both provide information about the issues people with convictions can face and what they can do about them.
The ABI has also developed a guide for insurers on their approach. Consumers can expect that insurers following this guide will:
• provide clear information about how they use previous convictions;
• ask clear and concise questions during the application process;
• help people find cover if they are not able to provide a quote;
• ensure that customers do not face unreasonable barriers when their conviction history changes; and
• treat customers fairly when dealing with non-disclosure.
Imported vehicles
Imported vehicles may be more expensive to insure than other vehicles. This is because it is often more difficult to find parts for them, and to find the right engineers to repair them. Repairs may be far more expensive if parts have to be imported. Also, security features may be lower than for UK cars.
Insurers use a vehicle rating system – which rates vehicles against a number of factors including the cost of repair and safety features – to help them calculate premiums. Some unusual imported vehicles may not be included in the system. As a result, insurers without knowledge of your vehicle may be reluctant to provide cover. However, cover is available; a specialist broker will be able to help you locate it.