Dodgy drivers dent UK car insurance claims system

Dodgy drivers dent UK car insurance claims system

July 25, 2011

Official inquiries into allegedly fraudulent personal injury claims arising from car accidents have begun in the UK, following reports that such claims are crippling British insurance providers.

The two separate inquiries were launched in June on the back of insurer’s own attempts to stamp out the behaviour, which is said to be costing industry in the UK more than $1.4 billion per year.

The domestic lobby group is appealing to UK MPs for an overhaul to the system, recommending that government investigate international efforts made to overcome personal injury claims such as whiplash from car accidents. They are also calling for a cap to be applied to fees charged, particularly by specialist claims management companies, which are reportedly “claims farming”.

Local laws
In Australia, our legal system prevents such a situation from taking place, largely because compensation schemes for motor accidents are legislated, and not normally subject to private lawsuits. As a result our car insurance industry is strong by comparison. But the Australian car insurance market is not without its faults –  it’s long been an industry dominated by too few players. Two main players –  Suncorp Metway and Insurance Australia Group -; with multiple brands each have a major influence on the price of comprehensive car insurance across the board.

But as smaller players increasingly take on the goliaths by offering cut-price premiums on comprehensive car insurance the market is getting a shake-up.

How to slash your premium
The best way to save on your comprehensive car insurance premium is to compare quotes online and look to these smaller players as they have some of the best value deals available. A national car insurance study conducted by RateCity earlier in the year revealed that smaller players such as Bingle, Budget Direct, Virgin Money and Youi all offered substantially lower premiums –  as much as 50 percent lower –  than those offered by some of the main players.

At the time of the survey Damian Smith, chief executive of RateCity, said the newer players –  along with others like Australia Post, Progressive Direct, and Real Insurance –  are finally putting some competitive pressure on a market traditionally run by a few main players.

Clearly the best way to save money is to compare car insurance policies, including those from smaller players.

As more brands enter the comprehensive car insurance arena – Coles and Kmart are two more recent additions to the market – competition is set to increase and prices decrease further.


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Learn more about car insurance

Can you insure your car for 6 months?

Most Australian insurers won’t offer you a 6-month car insurance policy, so you may need to buy a policy that covers your car for damages and cancel it after six months. You will need to purchase comprehensive car insurance to protect your car from accidental damage, theft, vandalism, or natural disasters.. 

Consider checking whether your 6-month comprehensive car insurance will cost more if you pay monthly or six-monthly premiums instead of a one-time annual premium. Another question to ask the insurer is whether you’ll need to pay administration or cancellation fees when you cancel the policy.

Alternatively, you can look for a suitable ‘pay as you drive’ car insurance policy, which usually offers you the coverage of a comprehensive car insurance policy but only requires you to pay for the distance driven. Such a policy may not be the ideal 6-month car insurance plan as it is based on how much you drive rather than for how long. If you need to drive a lot, you may end up paying more than you’d pay for regular car insurance. 

Does insurance cover a stolen car if keys were in the car?

A car insurance policy that covers the theft of your car, such as third party fire and theft insurance, usually covers a stolen car, even if the keys were in the car’s ignition.

However, your insurer may deny the claim if you live in an area where there have been several car robberies reported recently. They will see you leaving the keys in the car as a case of negligence. In such cases, your insurance provider may even expect you to have installed anti-theft security measures in your car. 

You may need to confirm whether or not you left your keys in your car, and if they had been stolen or misplaced, before filing your car insurance claim. The loss or theft of your car keys may be covered by a comprehensive car insurance policy, but usually as an optional item.

If you can confirm that your car keys were stolen, mention this in your claim as this will help establish that your car was not stolen as a result of your negligence.