Car insurance traps to avoid

Some car insurance policies look stuffed full with T&Cs and legalese. And there are often questions we're afraid to ask, which could leave us in the lurch further down the line. No wonder we feel confused.

But we're here to help, whether it’s to do with non-fault accidents, courtesy cars, another driver not admitting fault, or not telling your insurer about an accident.

Model car being sheltered by hands 

Does a non-fault accident affect my insurance?

The short answer is that it could. In a perfect world a non-fault accident shouldn’t impact your car insurance policy.

But 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, fault or non-fault.

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

The major drawback of a non-fault accident might be damage to your car. Your car insurance excess is often exposed but could be waived if the other party admits 100% liability.

Any claim, whether your own fault or not, shows that there’s a risk of damage to your car.

This is where no-claims bonus protection, if you have it, could come into its own.

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Am I entitled to a courtesy car in a non-fault accident?

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 for 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, take a hard look at your policy. And if your livelihood is made out on the road then adding a courtesy car to your policy might be worth considering.


What happens if I have an accident in my courtesy car?

The good news is that a courtesy car is likely to have the same level of accident 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 should be refunded.

But it’s worth checking to see what your insurance company says. Some policies can be rather less ‘like-for-like’ than others.

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

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


Do I have to tell my car insurance company about an accident?

Yes, you do. You must declare all accidents to your insurer, even if you didn't make a claim.

This means that your policy price could go up the following year. But the outcome of not telling your insurer about an accident could be much less favourable.

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, which is a form of fraud.

Also, if you don’t report an accident and you uncover hard-to-see damage later on, you might then feel you want to claim. Or a third-party might decide to claim after a prang in a supermarket, and the first your car insurance provider heard about it is from them. That might not reflect too well on you if this happens.

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


What should I do if the other driver doesn't admit fault?

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 – if the other car drove into the back of you or ran a red light, for example.

Don’t panic if it’s more of a grey area, though. Your insurance provider and the other party’s insurer should talk to each other and come up with an agreement on whose fault it was.


Will a non-fault accident affect my insurance?

Non-fault accidents are likely to impact on your insurance costs.

It’s not because your insurer thinks you’re to blame or because you’ve done something wrong. It's because their statistics show that people who’ve made no-fault claims are more likely to make future claims.


What happens to my insurance if I claim on someone else’s policy?

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

Of course, 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 costs, incremental or otherwise.

In the glam world of insurance risk, that’s how it works.

When you claim on someone else’s policy, it’s usually because the other driver is at fault. However, a protected no-claims bonus may lift you clear of the worst of future price hikes.

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 shifts.

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

Most insurers keep your claims and incidents record for at least 5 years. 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 – you've been involved in an accident, which makes you a greater risk to an insurer.


Can you keep the money from a car insurance claim?

Sometimes you can keep the payout from a car insurance claim. But it depends on whether you own the car outright or not. Lots of us buy our vehicles using car finance these days.

If you own your car outright and your insurer declares it a write-off, they think it’s too expensive to repair.

So, your insurer could send you a cheque as part of the settlement. It’s up to you to decide what you do with it.

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.

You could also have the car economically repaired by a trusted local garage, if you prefer. So, there’s some leeway.

Make sure you contact the DVLA and let them know about any new write-off designation, though. Owning a car that’s written off could make your insurance cost more expensive in future. It also, not surprisingly, is likely to reduce its resale value.


What can void my car insurance?

Lots of things could invalidate your policy so do keep your declaration clean and honest. If your insurer invalidates your insurance policy you could be left high and dry.

If you’re at all unsure on any of the details, give your insurer a quick call to check. Honesty is the best policy. Here are some of the more common things that could void your policy:


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 – perhaps the parent – is then left without cover. 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. Not all modding changes might void your policy, though.

If any changes are made, the law says you must let your insurer know. But 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 already modded you must still let your insurer know.

To keep your insurance costs low, try to avoid mods altogether and keep your wheels original and vanilla.

Many new cars are sold with non-standard extras. There’s a huge range, so don’t forget to add these on to your policy.

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

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


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 the public road and you park on the street instead, your insurer could argue that you’ve not been honest.


Choosing the right class of use

Another insurance trap to avoid is miscalculating 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.

If your car has the wrong class of use and you have an accident, your insurer could refuse a claim.

Also, some insurance classes such as business use contain multiple niches within them. It can get a little bewildering.

So, take care to narrow down the right class of use your vehicle and your work and social life slot into.

And if this changes, let your insurer know immediately.


If I’m insured, can I drive someone else’s car on third-party insurance?

First, look at your policy to see if driving other cars (DOC) is on your policy. We say that as a lot of drivers assume it’s automatically covered through their comprehensive cover, but that’s not always the case.

In the past, most fully comprehensive policies covered you for DOC but only on a third-party cover basis.

Say you hop into a friend’s car to drive them home because they’re worse for wear after a night out. If there’s an incident, you might be covered only for the other vehicle’s repair costs and no cover for your friend’s vehicle.

It could be an expensive night out and put strain on the friendship to boot. Although we can be in full control of our own driving when out and about, we can’t control other people’s responses.

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

Your car insurance policy details are usually easily available online. It’s easy to check the T&Cs on most policies, though you likely have to register online first.


What damage does car insurance not cover?

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 a 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, which can mean expensive repairs if not dealt with quickly.

Personalised number plates. If your insurer classifies your car as a write-off, the personalised registration plates may still be linked to the vehicle, which the insurer could have rights to.

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.