Motorists caught up in accidents that are not their fault, and do not even lead to a claim on their policy, are nevertheless facing steep rises in their premiums — some by more than £100 a year, Money has learnt.
One reader wrote in to say: “A friend of mine was parked when someone hit his car. The other driver provided their details and my friend claimed from the other driver’s insurance company. So far so good.
“He then informed his insurance company, which he believed he was obliged to do, only to find that when his renewal came through his premium had increased by well over £100.
“When he spoke to his insurer he was told it had increased because he’d had an accident. He was completely shocked and explained that a) he was parked when the other driver hit him and b) he had not claimed on his policy. It made no difference — and of course if he’d tried to change insurer he would still have had to declare the incident.”
This is not an isolated case. The Association of British Insurers (ABI) confirmed to Money that raising premiums in cases where no claim has been made is now fairly standard practice — although not all insurers do it.
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We asked the price comparison website gocompare.com to run quotes for two separate scenarios through eight of the larger insurers.
Gocompare used a fairly standard case: a 30-year-old man living in Cardiff with 10 years’ no-claims bonus and driving a 2013 Vauxhall Corsa.
In one scenario, he had no accident history; in the other his car had been hit while parked, with the £800 repair costs recovered from the other party — that is, he had made no claim on his own policy.
The results varied greatly: Esure raised its premium by the most, up £135 from £816 a year to £951, followed by More Than, which put it up by £120 from £758 to £878. The average hike was just under £50.
“Being hit by another driver can be a stressful experience, so it may seem totally unfair to see your insurance premiums rise as a result of an incident that wasn’t your fault, especially if the other party’s insurer has covered all the costs,” said Matt Oliver, car insurance specialist at gocompare.com.
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But frustratingly, some insurers do exactly that, raising their rates because an incident has occurred, regardless of who was to blame and whether or not you have claimed.
“Insurers try to justify this by saying that being involved in an incident increases the risk of making a claim in the future,” Oliver said. “This rationale will come as cold comfort to drivers who see their car insurance costs leap through no fault of their own.
“That said, not all insurers will hold a ‘not at fault’ claim against you, so if you do find your existing provider has used this as an excuse to hike your premium at renewal, be sure to get online and shop around for a better deal.”
The ABI says the problem is all down to algorithms: if your car is involved in a no-fault accident, it is statistically more likely to be involved in an at-fault one in the future.
Hastings Direct, which in our scenario raised the premium of our hypothetical customer by £45.54, putting it in the middle of the range, said that all insurers use a number of different rating factors to determine risk and the premiums they charge.
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“These rating factors are based on actual experience and how likely a customer is to make a claim,” it said.
“Our experience shows that drivers involved in an accident, whether or not they are directly at fault, are more likely to have an accident or make a claim in the future.”
Admiral, which put up its premium by £49.28, has come to a similar conclusion.
It asks those applying for policies whether they have had any accidents, incidents or claims in the past three years, regardless of fault or whether any claim was made.
“When calculating a premium for a customer, we use over 50 different rating factors to determine the risk that a customer will go on and make a claim.” There was “overwhelming” evidence that customers with non-fault claims or incidents would be more likely to make a fault claim in the future.
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Thankfully, not all insurers work on this basis: three of our eight — Aviva, Churchill and LV — did not raise the premium in cases where there had been a no-blame, no-claim incident.
“In this particular scenario, LV wouldn’t increase a customer’s car insurance price just because they’ve told us about an incident that doesn’t result in a claim being paid to them,” said Selwyn Fernandes, LV’s managing director of car insurance.
“We log all potential claims incidents on a central database, but the database shows if nothing was paid out for a claim. Some insurers may increase their price due to an incident of this type, but LV doesn’t.”
Money’s findings come as the cost of comprehensive car insurance nears an all-time high. The average policy is now £847, according to research by the actuarial firm Willis Towers Watson released by Confused.com.
Insurers say they have had to increase prices for several reasons. One is the fact that premium tax rose from 10% to 12% in June.
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They also claim changes to the way large compensation payments to accident victims are calculated will cost the industry an estimated £5.8bn.
In addition, the cost of vehicle repairs has risen because the weak pound has made imports of car parts more expensive.