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Watch out! Costly car insurance pitfalls

Toy car on a pile of coinsWhen it comes to car insurance, make sure little-known pitfalls don’t catch you out. Two of the most common areas for confusion surround non-fault accidents and courtesy cars.

If you’re involved in any car accident then your car insurance premium is likely to rise at renewal.

But did you know some insurance companies will raise your premiums at renewal even if the accident wasn’t your fault – known as a non-fault accident.

Will Thomas, car insurance expert at Confused.com explains: “Every insurer employs clever people to analyse its driving data.

“This data is then used to work out the statistical risk of drivers making a claim in certain situations.

Motorists beware

But if you remember anything, remember this: “Some insurers data shows that drivers involved in non-fault accidents are more likely to be involved in an accident that is their fault in the next few years.

“This is why if you’re involved in a non-fault accident your car insurance premium may rise at renewal time,” says Thomas.

This is the case even if you don’t make a claim for the damage to your car on your own insurance policy.

If you’re involved in a non-fault accident and the other driver’s insurer accepts liability, you are entitled to claim on the other driver’s insurance policy.

But you have to report any accident to your own insurer – all policies say this in the small print – so this is how your own insurer knows you’ve been involved in a road accident and so may hike your premium accordingly.

Now, this might not seem fair, but it’s the way the insurance industry works which is why, says Thomas, it pays to shop around at renewal time and see if you can find a cheaper deal.

“Although your own insurer may raise your renewal premium, it doesn’t mean another firm won’t offer you a better deal. So it’s always worth taking a look.” 

Claiming on another driver’s insurance

In some cases, making a claim on the other driver's insurance - known as a third-party claim - will be straightforward.

For example, if another driver has hit you from the rear that’s generally considered non-contestable – e.g. it’s generally accepted that the other driver is at fault and can’t contest your claim.

However, if you believe you’re not at fault but this isn’t immediately obvious, there are a few things you can do to help back-up your claim.

  • Swap details with the other driver at the scene of the accident.
  • Take pictures. Most people have a smartphone these days so it’s easy to take pictures of the damage to both cars and the surroundings. Do this before the cars are moved.
  • Take down names, addresses and phone numbers of any witnesses to the accident. The insurance company may need to contact them if there’s any question over who’s liable for the accident.

Read How to make a car insurance claim.

Courtesy car confusion

When is a courtesy car not a courtesy car?

This is another car insurance pitfall that motorists need to be aware of.

Thomas explains: “Courtesy cars are generally included with all comprehensive insurance policies.

“If you have a car accident but your vehicle is deemed repairable you will get a courtesy car to tide you over until your car is back on the road.”

Be aware that this courtesy car entitlement is often based on you taking your car to a garage approved by the insurance firm - if you take your car elsewhere for repair you may not get a courtesy car at all.

This will be covered in the terms and conditions of your car insurance policy so do read the small print.

Hire cars

But where many motorists come unstuck is if the insurance firm deems your car a write-off – in that it’s not repairable or the cost of repair outweighs the value of the vehicle - you won’t receive a courtesy car.

In fact, you’ll be without a car altogether unless your insurance policy has hire car cover.

But hire car cover isn’t normally included with comprehensive insurance policies.

It’s normally offered as an add-on to your policy and usually costs between £20 and £30.

Common misconception

Thomas says: “It’s a common misconception among motorists that courtesy car cover applies when your vehicle is off the road.

“But if your car is off the road for good, if it’s a write-off, then you won’t receive a courtesy car.

“It can take a few weeks from your car being written off to receiving the payout for the value of your car form the insurance firm.

“So if you’d be stuck without a car for this period of time then you might want to consider adding on hire car cover to your motor insurance policy.” 

Click the following link to read Car insurance extras: Weighing up the worth for more information on car insurance additional products.

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Naphtalia Loderick

Naphtalia Loderick

Naphtalia Loderick covers all things consumer for Confused.com. She started out on a weekly newspaper, via a national news agency and a stint in the fun but ‘not as glamorous as it appears on screen’ world of TV at the BBC researching consumer films for The One Show.

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