Car insurance traps to avoid

Many car insurance policies are stuffed full with T&Cs and legalese. And there are often questions we're afraid to ask, or assume we know the answers to.

But getting things wrong could lead to your car insurance being cancelled or make it harder to get cover in the future.

Whether it’s non-fault accidents, courtesy cars, or telling your insurer about an accident, we know what to do (or not do) for the best outcome.

Model car being sheltered by hands

In a perfect world a non-fault accident shouldn’t impact your car insurance policy. But the world isn't always perfect.

Car insurers know that if there’s non-fault claim history, there’s a bigger chance of a claim in future. And you're required by law to declare all accidents to your insurer.

That's whether or not you claim, and whether it's classed as fault or non-fault.

So don’t be surprised if your car insurance is more expensive the following year, even after a non-fault bump.

When you make a claim, you also have to pay your car insurance excess. This can sometimes be claimed back by your insurer from the other party in a non-fault claim, if you know who they are.

Any claim, whether your own fault or not, is likely to increase your insurance costs. This isn't because your insurer thinks you’re to blame or because you’ve done something wrong.

It's because car insurance industry statistics show that people who’ve made no-fault claims are more likely to make future claims, and the insurance price changes according to risk.

And you also have the possibility of losing some or all of your no-claims bonus when you make a claim. You can get often no-claims bonus protection added to your policy to stop this happening.

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If you're left without a car following an accident, you could be entitled to a courtesy car.

But not all policies offer this as standard.

If you’re involved in an accident and the other driver was at fault, it’s usual to claim a courtesy car on their insurance. That's even if your own policy doesn’t provide one.

But if the accident is your fault, you’re entitled to a courtesy car only if it’s promised in your cover.

And if your car’s written off as a result of an accident or is stolen, a courtesy car might not be offered.

So read the policy booklet. And if your job relies on access to transport, adding a courtesy car to your policy might be worth considering.

The good news is that a courtesy car is likely to have the same level of cover as your existing policy.

That means if you have an accident in the replacement vehicle, you should have to pay only your excess. And if it’s not your fault, this could be refunded.

And you should also be entitled to another courtesy car if your courtesy car is being repaired following a crash.

But it’s worth checking to see what your insurance company says.

Some might offer only third-party insurance, and a few car insurance policies might not cover the replacement car at all.

Yes, you do. You must declare all accidents to your insurer, even if you didn't make a claim. This means that your insurance price could go up the following year.

But if you don’t let your insurer know, they could have the right not to renew your policy. In some cases, your insurer might consider you to be deliberately withholding information, a form of fraud.

Also, if you don’t report an accident and you later discover some hard-to-see damage, you might then want to make a claim.

Or a third-party might decide to claim after a prang in a supermarket car park, and the first your car insurer hears is from their insurance company.

Your insurer is going to want to know why you didn't report it when it happened.

So, generally it’s better to report every incident to your insurer, even if it’s on a ‘for information only’ basis.

Drivers are often advised not to admit fault at the scene, but that doesn’t mean they won’t admit it at a later date.

Even if they later fail to admit fault, they can still be held liable if the evidence of the accident proves it. For example, if the other car drove into the back of you, or ran a red light.

Don’t panic if it’s not clear who is at fault, or if there's an element of shared blame. Your insurer and the other party’s insurer should talk to each other and come up with an agreement on whose fault it was.

Any claim – whether on your policy or another driver’s – risks your insurance costs rising when your renewal comes around.

When you claim on someone else’s policy, it’s usually because the other driver is at fault. 

And if the accident wasn’t your fault, it’s less likely you should see a large rise. But any claim puts pressure on your insurance price.

A protected no-claims bonus may help keep your insurance price in check. But even with protection in place, your insurance could rise following a claim on another policy.

That’s because every reportable incident means your 'risk profile' changes.

Remember every accident or incident must be reported to your insurer, even if you’re not at fault.

When you compare car insurance quotes through us, we'll ask you for information on any accidents and claims for the past 5 years. 

Most insurers keep your claims and incidents record for at least 5 years too. Some may extend this to 10 years. And failing to disclose accidents to your insurer risks invalidating your cover.


What happens if someone else claims on my car insurance?

If you're in an accident and a third-party tries to claim on your insurance policy, they're effectively holding you at fault for the accident.

If you agree with this, then your car insurance company is likely to handle the claim on the third-party's behalf.

This could impact your no-claims bonus – even though you might not have made a claim, a claim has been made on the policy.

Regardless of who was at fault, and even if you decide not to make a claim, you could see your car insurance costs go up when you renew your policy.

That's because – claim or no claim, and fault or no fault – you've been involved in an accident, making you a greater risk to an insurer.

Sometimes you can keep the payout from a car insurance claim. But it depends on whether you own the car outright or not. Many of us buy our vehicles using car finance these days, so any payout is likely to go straight to the finance company..

If your insurer declares your car a write-off, this means they think it can't be repaired, or it’s too expensive to repair.

There are 4 separate write-off categories. If your damaged vehicle falls into Category N – a car with non-structural damage – you can still legally continue to drive it.

Category S means it can be driven again if it's repaired to a roadworthy standard.

Category A and B cars can't be driven again, but you may be able to get parts from a category B write-off.

Once you accept a payout, your written-off car belongs to the insurer. If you want to keep the car you should be able to agree a price for this with your insurer. Your payout is then reduced by this amount.

Make sure you contact the DVLA and let them know about any new write-off designation, though.

Owning a car that’s been previously written off could make your insurance costs more expensive in future. It's also likely to reduce its resale value.

Your car insurance policy can be invalidated for various reasons.

And if your insurer decides your policy is invalid, or needs to be cancelled, you could be left without any insurance at all. It could also make it more difficult to get cover in the future.

Here are some of the more common reasons that your policy could be made void:


Car insurance fronting

If a parent registers a policy in their name but their child is the main driver of the vehicle, that’s fronting.

If fronting is discovered, it means the older driver – usually the parent – is then left without car insurance.

Fronting is also a criminal offence and can lead to court, points on a licence plus a chunky fine.

There’s nothing wrong with having a named driver – unless they’re doing more mileage than the main driver.


Car modifications

A modified car here might mean anything from supercharging to stripes and spoilers – and even adding air conditioning if it’s an older car.

But obviously not all modifications will void your policy.

But if you make any changes to your vehicle, the law says you must let your insurer know.

In fact, it's often a good idea to have a chat with your insurer before you make any changes, even with something fairly minor.

If you’ve bought a car that's already modded you must still let your insurer know.

You should also ensure that any non-standard extras are listed on your policy. There’s a huge range, so don’t forget to add these on.

Non-standard safety extras like autonomous driving aids could actually lower your costs, too – so always disclose them.

Even minor headlight changes can be a modification. So take care, especially if you’re buying a used car.


Changing where you park your car

If you’re lucky enough to have your own garage or driveway, do use it. Your insurer should usually ask you where you park your car overnight as part of the policy.

If you declare that it’s parked off road and you park on the street instead, your insurer could argue that you’ve not been honest.

Another insurance trap to avoid is misstating your car's class of use.

There are 6 in total. They go from the standard social-only right through to commercial, including business use.

You might need business use cover if you’re an NHS worker role visiting patients, for example, or you drive co-workers from site to site in your own car sometimes.

So, take care to narrow down the right class of use and match it with how you use your car in your work and social life.

And if this changes, let your insurer know immediately.

Let's say your car insurance policy has the wrong class of use and you have an accident using your car for a different purpose. Your insurer could refuse the claim and you could be treated as uninsured.

Many drivers assume they are covered to drive other cars if they have a fully comprehensive policy.  But driving other cars (DOC) isn't always automatically covered through their comprehensive cover

Even if DOC is included, there are probably some restrictions you should be aware of.  

Most DOC cover is only provided on a third-party cover basis.

So you might use a friend’s car to drive them home because they’re over the drink-drive limit. If there’s an accident, you might only be covered for the other vehicle’s repair costs with no cover for your friend’s vehicle.

And if you’re under 25, you might not have DOC cover as part of your policy at all.

Does your car insurance cover you for everything? You won’t be surprised to hear it doesn’t. A good quality insurance policy, though, should cover you for the basics and more besides.

However, some policies may leave out cover for several different situations including:

Vandalism. An insurance company can’t claim off an unknown vandal, however unfair the situation is. Some insurance companies have vandalism included in their policies, but not all do.

Filling your fuel tank up with the wrong fuel, meaning expensive repairs if not dealt with quickly.

Personalised number plates. If your insurer classifies your car as a write-off, the personalised registration plates will still be linked to the vehicle, that the insurer now owns.

A registration plate moves automatically with the vehicle, not to the person who bought the plate originally.

If you’ve a got a valuable registration plate, watch out for this. You can contact the DVLA to get the plates removed and put on your next car.

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