Honesty not the best for insurance policies

piers3180

Around this time last year I bought a new car and bought car insurance through Admiral. Previously I had access to my parents' car as a named driver on their policy.

When applying for the insurance I erroneously omitted to include details of an accident I had in 2011, for the simple reason that I had no idea that a claim was ever made.

It was only this year, following the death of my father, that I requested a copy of his car insurance. I was surprised to find a claim in November 2011 under my name for a Fault Accident totalling over £17k. I vaguely remembered a shunt but no significant damage. I guess there was damage to the engine and that my father had it fixed and claimed for repairs but never told me.

My insurance is now due for renewal and so I returned to Admiral to give them the chance to match the best offer I had found (this time including the 2011 accident). I freely admitted that I had recently discovered the 2011 accident and that I had unwittingly given inaccurate information last year. They told me that although the 2011 accident would not affect my premium for next year, I now owe them over £100 for underpaying last year's premium.

I feel a bit sore about this. If I'd been dishonest, not called Admiral or lied about the 2011 shunt and just gone with a new insurer for the coming year I would not be in this situation. As it is, I now am expected to pay an extra £100 for cover that is almost expired.

Admiral told me if I refuse to pay they'll send debt collectors after me.

Does anybody have experience of this and do I have any options?

dunstonh

Insurance is based on facts. Facts you either disclose and they trust you on or information they find out about. The accident happened. The claim happened. They are facts. You cant challenge those.
Should they be declared? - yes.

Your pricing should include those so Admiral are correct. Indeed, the insurers can back date to previous years policies if they wanted to. So, an adjustment in current year only is not as bad as it could have been.

Your options are to pay it or to not pay it and face the consequences (which are a lot more serious - try getting insurance after having to declare cancellation due to non-payment).

InsideInsurance

If you had lied about it they would have cancelled it for fraud and you'd be untouchable to most insurers for the rest of your life.

Because they believe its an honest mistake they are just asking you to put it right.

thenudeone

You failed to disclose material information in order to obtain motor insurance (and incidentally committed a criminal offence http://www.legislation.gov.uk/ukpga/1988/52/section/174) and you're surprised that the insurer isn't too happy about it?

If you don't agree, your insurer could cancel your insurance immediately which you will have to declare to new insurers.

The insurer could end up paying £1m or more for damages and injuries due to an accident that was due to your driving, so it's not unreasonable that they have all relevant information about your driving history.
You should pay the appropriate premium for the risk that the insurer has shouldered, whether that's at the beginning or part way through.

piers3180

thenudeone wrote: »

You failed to disclose material information in order to obtain motor insurance (and incidentally committed a criminal offence and you're surprised that the insurer isn't too happy about it?

In order to commit a criminal offence there must be intent.

My gripe here is that this extra premium seems arbitrary and I have no real option but to pay. Luckily it's only £100 - what could I do if they had informed me that the extra premium was £500 or £1000? Who ensures that this extra premium is fair and proportional?

Yes, I did not disclose information. However, there was no intent to deceive as I did not know there had been a claim at the time I purchased the insurance.

I'm more than happy to pay fair premium and you're absolutely right that I should.

My point is that there is no mechanism to measure how the market views this information and how to calculate the risk premium.

whatmichaelsays

piers3180 wrote: »

My point is that there is no mechanism to measure how the market views this information and how to calculate the risk premium.

That's largely because each insurer assesses risk differently.

Essentially, what they were actually insuring carried a greater risk than what they thought they were insuring. I suspect that had you declared the claim, your premium would have been £100, although things like new customer discounts and such might muddy the comparison somewhat (it's also possible that the £100 include an admin fee).

In terms of your question "could they charge £500 or £1000?" - technically they could, if that is how they assess the risk of someone with a £17k at-fault claim on their book. Admiral, in this instance, seem to be more sympathetic to an at-fault claim that some other insurers might be - you'll never know, because no insurer will disclose commercially sensitive information such as their risk profile matrix.

dunstonh

In order to commit a criminal offence there must be intent.

Actually that is not correct. Intent can adjust the sentence and the offence but intent is not always required. You may also have heard the phrase that ignorance is no excuse.

However, unintentional non-disclosure can result in a range of things. This can be making you pay what you should have paid through to you finding yourself uninsured and in the event of a claim, you losing all your assets to pay for it.

My gripe here is that this extra premium seems arbitrary and I have no real option but to pay. Luckily it's only £100 - what could I do if they had informed me that the extra premium was £500 or £1000? Who ensures that this extra premium is fair and proportional?

The most common method (but not exclusive) is that the premium is recalculated to what it would have been at point of purchase and you pay the difference. Some add an admin charge. There is no requirement to ensure it is fair and proportional as its not a penalty fee.

My point is that there is no mechanism to measure how the market views this information and how to calculate the risk premium.

it is up to each insurance company to price the risks it insures. Just as it is upto Heinz how much they sell supermarkets a tin of beans and how much the supermarket sells it to consumers

InsideInsurance

piers3180 wrote: »

In order to commit a criminal offence there must be intent.

My gripe here is that this extra premium seems arbitrary and I have no real option but to pay. Luckily it's only £100 - what could I do if they had informed me that the extra premium was £500 or £1000? Who ensures that this extra premium is fair and proportional?

Yes, I did not disclose information. However, there was no intent to deceive as I did not know there had been a claim at the time I purchased the insurance.

I'm more than happy to pay fair premium and you're absolutely right that I should.

My point is that there is no mechanism to measure how the market views this information and how to calculate the risk premium.

Ultimately if you believed they were taking you for a ride and were arbitrarily charging you more because they have you by the short and curlies then you would register a complaint and if not happy with the reply then take the matter to the FOS.

Whilst generally pricing is a commercial consideration and outside of the FOS' remit when you are talked about a trapped insured there would be an interest. Undoubtably the FOS would ask the insurer to reveal to them how the price was calculated and to demonstrate it was in line with THEIR standard pricing at the time - ie the OP isnt being penalised for the late declaration.

Of cause it may be this insurer hates people with prior claims and charges masses amounts of money but that would be legitimate as long as they charge all customers that same loading (normally a %) at that time.

If that is the case then thats the consequence of selecting and insurer on wrong information provided. If the insurer had inflated the price because of the situation beyond adding their standard admin fee then the FOS would uphold the complaint

thenudeone

piers3180 wrote: »

In order to commit a criminal offence there must be intent.

Complete rubbish.

Intent is only relevant if it's specifically mentioned in the relevant Act of Parliament.

Many criminal offences do not require any intent at all. In particular, most motoring offences are absolute offences where intent is irrelevant. This includes things like Driving without insurance or with an expired licence (after age 70) as well as minor ones like driving with a broken side light. It would be nearly impossible to police offences like this if the prosecution had to prove intent.