Car insurance premiums to rise as insurance fraud worsens

The ABI has reported that drivers are paying on average £44 in higher car insurance premiums to cover the ever increasing costs of insurance fraud.

Unfortunately as insurers and underwriters are developing more sophisticated ways of detecting fraud, people are lying or withholding information when applying for insurance up front in order to reduce car insurance premiums.
Such practices include, failing to list convictions or previous claims, using false addresses, false dates of birth and more commonly younger drivers listing a parent as named driver, also known as fronting.

Although the common perception is that “a little white lie won’t hurt” in reality withholding or giving any false information to an insurance company is potentially invalidating any car insurance policy, meaning there are potentially hundreds of drivers “un-insured” on the UK’s roads.

The implications of the smallest lie to a car insurance company are not to be underestimated.  The penalties for being caught driving without insurance aren’t light, with up to 6 points on your licence and an endorsement, meaning any future insurance policy will be costly, as well as limiting the number of car insurers who will be able to provide you with cover.

There are a number of tips drivers can follow to get a cheaper premium without putting themselves at risk of having a policy invalidated, here’s our top 5 tips below:

1 Shop around – not only on premium but also on benefits, policies will vary by what they offer so what maybe the cheapest premium may not have the best overall offering

2 Add an older driver – Adding a parent or older driver as a named driver to the policy can give significant discounts and more important this practice is legal!

3 Consider a larger voluntary excess – By selecting £500 instead of £250 cheap car insurance is much more easy to achieve and reduced by as much as 10%. By opting to pay a higher amount in the event of a claim you’re sharing the risk with the insurer who can pass the savings back to its customers

4 If you have a garage use it – some insurers will give a discount for keeping your car in a garage when it’s not in use rather than it being left on the driveway or an open road.

5 Fit an alarm and immobiliser if your vehicle doesn’t already have one, the greater the security the less likelihood there is of anything happening to your vehicle and again this will lead to a reduction of up to 2-3% of the premium.

Moneyextra.com recommends you take independent financial advice before acting on any article

2009-07-21 16:40:01 © Moneyextra.com