Five ways you're invalidating your car insurance

Car insurance is a necessity for every Australian car owner but like applying for a car loan, offering misleading information could land you in hot water, and in this case invalidate your car insurance premium altogether.

In the year to March 31 2014, gross written premiums for domestic motor vehicles amounted to $7.87 million across the country, according to the Australian Prudential Regulation Authority’s March 2014 Quarterly General Insurance Performance Statistics.

With premiums mounting some may chance their luck and look to cut corners and costs on their car insurance policy but you’ll be kicking tyres at the car yard if you end up paying off a car loan for a vehicle you can’t use due to damage your insurance company won’t cover. Don’t invalidate your car insurance by making these foolish mistakes!

Fronting 

If you bend the truth by listing someone, such as an older and more experienced driver, as your primary driver in order to pay lower premiums, you might find yourself bang out of luck when making a claim for a secondary driver.

For instance, if parents list their late teens or early 20-year-old children as secondary drivers when these individuals drive the vehicle in question 24/7 then they may be seen to be “fronting”. Accordingly, this can invalidate their policy.

Research from Slater & Gordon has revealed how a driver’s age can affect road safety decisions, with drivers aged 16 to 24 years less likely to recognise factors inside a vehicle as safety hazards.

“These internal factors included talking on a phone while driving — 25 percent of young people ranked this as the biggest danger facing P-platers compared to 40 percent of all ages — their own speeding (22 percent versus 29 percent) and distracting passengers (14 percent versus 17 percent),” explained Genevieve Henderson, Vehicle Accident Lawyer for Slater & Gordon.

With this in mind, it’s become more important than ever to have adequate car insurance coverage that covers all drivers who sit behind the wheel.

If you don’t list a particular driver on the policy, you may incur an unlisted driver excess if this person needs to make a claim.

Fraud

Don’t forget to disclose! If you withhold relevant information when taking out a policy, you may struggle to get a payout for a claim further down the track.

Your actions may be seen as fraudulent; meanwhile, an innocent mistake could equally result in a void policy, depending on the circumstances of the case. If in doubt, ask your provider what information is required.

Modifications

Want to dip into your savings account to pay for some slick modifications? 

Be sure to check your insurance policy before doing so. In some instances, undertaking modifications without your insurer’s approval can result in a voided policy.

If you’re intent on altering your exhaust system, bodywork or wheels, give your insurance provider a call before “suping-up” your prized vehicle!

Wrong use

Are you insuring a vehicle for leisure, but using it five days a week as a commercial vehicle?

That’s a big no-no! Often, your policy will stipulate what the insured use of the car is, such as domestic or commercial.

Premiums

Blew all your money on a beautiful new handbag?

If you’ve spent your salary before paying your premiums, you could find yourself with a policy as useful as lips on a chicken. Keep on top of your premiums and contact your provider immediately if a payment has bounced.

Car insurance is a pricey but necessary expense so make sure you aren’t invalidating your insurance by withholding or providing misleading information to your insurance company. Otherwise, the little bit you look to save in the short term could cost you thousands in the long term.

Compare car insurance