Weird rea­sons for car cover to cost you more

The Daily Telegraph - Your Money - - YOUR MONEY -

Sim­ply mov­ing to a newly built home could re­sult in you pay­ing a higher pre­mium. Sam Mead­ows ex­plains

The way car in­sur­ers cal­cu­late your pre­mi­ums can be in­fu­ri­at­ing. Many driv­ers will have seen their pre­mium soar for no rea­son other than the way they filled in the form or some ob­scure fac­tor in their per­sonal cir­cum­stances – of­ten be­yond their con­trol.

This is mainly down to the way in­sur­ers cal­cu­late risk. Com­puter al­go­rithms will de­ter­mine the like­li­hood of you mak­ing a claim based purely on the in­for­ma­tion you pro­vide. This can lead to ab­surd sit­u­a­tions such as the case of a woman deemed a more risky propo­si­tion be­cause her car was crashed into and writ­ten off while it was parked.

Here Tele­graph Money de­tails five un­usual rea­sons your car in­sur­ance pre­mium might in­crease. in front of you at a junc­tion and causes a crash, in­sur­ance com­pa­nies will ac­cept that it was not your fault. But they may still in­flate your pre­mium when you come to re­new as, sta­tis­ti­cally, you are more likely to be in an­other crash.

One ex­pert said: “It may be sta­tis­ti­cally true that driv­ers who have been in­volved in an ac­ci­dent are more likely to be in­volved in an­other – even when it wasn’t their fault – but it’s sim­ply not a fair pol­icy to charge peo­ple more in those cir­cum­stances.

“If some­one jumps a light and smashes into you, there’s no good rea­son why you should have to pay more for your in­sur­ance as a re­sult. This kind of data-driven un­fair pric­ing is what gives in­sur­ers such a bad name.”

Mary Man­gan, 53, found her­self in a bizarre bind with her in­sur­ance com­pany when her car was writ­ten off while she wasn’t even in it.

Her car was parked on the road out­side her home when a van driver lost con­trol and hit both her ve­hi­cle and her neigh­bour’s, writ­ing them off. When she came to re­new, her pre­mium had in­creased by more than £100.

She said: “How can that be the case if I wasn’t even in the car?” An­other fac­tor that in­sur­ers will use when de­ter­min­ing your pre­mium is your ad­dress. Some areas are clearly more risky than oth­ers, but mov­ing to a newly built house could also cost you be­cause it may not ap­pear on the in­surer’s data­base.

Doug Welch was one vic­tim. Af­ter mov­ing to a newly built house in Northamp­ton­shire he was shocked to find that the re­newal pre­mium quoted by Saga, his in­surer, was £1,117 – al­most tre­ble the £464 he pre­vi­ously paid.

Saga said it got its in­for­ma­tion on ad­dresses from credit ref­er­ence agen­cies. The small amount of data on the area meant it came back with a poor rat­ing, lead­ing the com­pany’s un­der­writ­ers to in­crease the pre­mium heav­ily. Saga said that it had not passed Some­thing as sim­ple as the way you de­scribe your job can make a huge dif­fer­ence to your pre­mium. In­sur­ing the same car in the same post­code, but de­scrib­ing your job in a dif­fer­ent way, can mean you pay hun­dreds of pounds more.

Analysis by Tele­graph Money found that a woman in her 40s who de­scribed her­self as a house­wife rather than un­em­ployed could save al­most £200.

With all other vari­ables the same, the cheap­est quote of­fered when she de­scribed her­self as un­em­ployed was £807, but when she de­scribed her­self as a house­wife the cost fell to £622. The two quotes were from the same in­surer.

www.tele­graph.co.uk/funds

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