'Fault' insurance claim resulting in loss of annual premium

Quentin

K-Lye wrote: »

The point is that this scenario is unfair and should they reject the reinstatement of my policy then I will very much be in this situation

I hope you can get them to.

(But have you checked whether or not your policy would have continued anyway after a total loss claim as some end immediately, and some just give you a small window to arrange a replacement car)

Hintza

Look at this way the insurer could insure you on a daily basis at £30/day or they could offer 365 days for (say) £400 if you pay in advance.

Which would you choose?

(But then if you took the daily insurance you would be on here saying it was unfair because you only drove it for 2 hours out of the 24!)

fred7777

farmerboy wrote: »

But neither would happen as you wouldn't get any refund if you had to claim. Its just down to chance as to when you have an accident.

I know that, it's a hypothetical argument intended to point out that the alternative,which I think the OP would see as fair to the policy holder, would be unfair to the insurance company.

fred7777

K-Lye wrote: »

Quite so but I would argue that the Insureres being big business (as opposed to indivudal drivers) have the responsibility to mitigate this risk through fair policy. Currently this is not the case and to excuse them is akin to saying well the Banks are excused for "misselling" PPI.

I don't see how the insurers can mitigate the risk to themselves through a fairer policy. Although they could always have policies which were better for their customers.

vaio

Yep, but regulators don't get involved in risk mitigation, but they do get involved in fairness.

It's obvious that there is a risk/cost for the OPs insurer providing cover until the original end of his policy. The basic question is, if the OP decides to relieve his insurer of that risk/cost by cancelling then (fairly) who should get the benefit of that avoided risk/cost?

Should it be the punter by way of a premium refund for the cover they aren't going to get or should it be the insurer by way of retaining a premium for cover they aren't going to provide?

From a fairness pov I don't think the fact that there has been a claim affects the answer.

ERICS_MUM

you bought it, you used it. Whenever the accident occurred over the year your policy runs, it still costs the insurance co the same amount.

Wheres the problem in that ?

NiallB

K-Lye wrote: »

The issue is between the disproportionate way it affects drivers depending on where they are in their payment period.

So play the system then: try to crash later in the year

Joe_Horner

vaio wrote: »

From a fairness pov I don't think the fact that there has been a claim affects the answer.

Of course it does. Insurance is essentially a betting game (for customer and insurer).

The insurer accepts Your premium based on their best guess odds that they wont have to pay out - just as a bookie accepts a bet based on their best guess about whether a certain horse will win or not. If you place an accumulator bet and the first horse loses, you don't get the rest of your stake back!

The risk to the insurer isn't "how long cover lasts" but, rather, "will this driver cause us to pay out during the policy?". Once you have a fault claim, the answer to that gamble is known, in exactly the same way as if the first race has already been lost.



Take a slightly more extreme example than the OP's:

You buy a policy for £183, which the insurer has worked out based on their calculated odds of about 2700:1 that you'll cause a major fatal accident.

Later that day, you do cause a fatal crash involving a 1/2 million pound payout. The actual odds in the insurance gamble have now become 1:1 because the winning horse is known.

You immediately cancel the policy and demand 364 days premium back.

If the time you've held the policy is relevant then having that refund would mean they'd taken on a 1:1 chance (in retrospect) at odds of 1000000:1 instead of the 2700:1 they'd calculated. Not going to happen!

vaio

yep, but as above, the fact that I've had a claim on day one doesn't affect the risk/cost to the insurer of providing the other 364 days of cover so why should they get to keep the premium if I cancel rather than refunding me? It's not a single event I'm insuring against, it's any claims over the next year and that can include multiple claims.

The insurance insiders are fond of explaining non fault loading by saying that people who have a claim are very likely to have another one. That being the case then the risk/cost to the insurer of providing the other 364 days cover is much more than 2700:1 so you'd have thought they would be only too pleased to get rid of that risk at the 2700:1 premium.

fred7777

K-Lye wrote: »

Again.. this is a calculated risk to Businesses and they account for these things in varying their premium prices, no claims, etc. It is not right they apply unbalanced policies unfairly penalising one driver over another when there is absolutely no basis in differetiating between the two in the example (other than 'when' they have their accident).

Are you are proposing that an insurance company follows your plan and increases all premiums to cover this?

If so isn't this unfair to those who don't cancel their policies as they are paying more to make up for refunds to those who cancel?