Car insurance renewal hike

SixSigma

Just received my renewal notice. It says 61% increase.. That's £222 extra. They say this is because i have a claim ongoing. The claim is for a minor dent cause by an unknown person reversing into my car. This was done whilst we were away from the car.
Because the person is unknown it is classed as not recoverable and shown as AT FAULT.
I have a 20 year no claims discount which is protected.
I will be cancelling the claim and paying privately.
How can the insurance company justify such an increase as i am not to blame, and they advised that if i go ahead with the claim and switch to another company that company will receive information stating AT FAULT as it is their wording for not recoverable.
I will be shopping around for a new insurance company and hopefully the wording AT FAULT will be removed.
Regards, a very frustrated safe driver who I would have thought would be a very welcome customer to any insurer.

SaverRate

The claim is on the policy now so you may aswell proceed if you cancel the claim you will still have to declare it.

Go on a comparison site but show the claim as ongoing and at fault. You will probably get a cheaper/better value for money quote

Sandtree

Insurance like Motor is based on statistical analysis and that analysis shows that those people that have one accident is more likely to have another. 

Similarly claims are typically not analysed to a fine grain of detail, mainly due to the reliability of new customers providing the necessary data and so you will currently be in the same bucket as everyone else thats had a fault collision claim be that an untraced driver hitting their car with minor damage or someone causing a fatal motorway pileup. 

SixSigma

Thank you for your comments. Whist i appreciate the process you have described i can not help but feel hard done by. So when the perpetrator is not known, the insurance company can not recover money from the perpetrator, so they increase the premium to cover their losses. They have received money from the insured person every year and not had to pay back anything.. What do they do with that money.

Merlin139

My understanding of protected No Claims would be that 1 claim would not effect your PNCB

Sandtree

SixSigma said:

Thank you for your comments. Whist i appreciate the process you have described i can not help but feel hard done by. So when the perpetrator is not known, the insurance company can not recover money from the perpetrator, so they increase the premium to cover their losses. They have received money from the insured person every year and not had to pay back anything.. What do they do with that money.

To cover their losses? No, to reflect the increased risk they think you represent going forward... yours was some minor damage and so were you to renew, and you are under no obligation to do so, it may in laymans thinking do so (if you ignore how insurance accounting works) but someone else could have had their £100,000 car written off by an unknown third party and they too would see the same proportional rise in costs which clearly will go no way close to recovering the outlay even if they renew for the next 20 years. But your also in the same bucket as a fault claim I was looking at the other day which has paid out $40m so far and has a reserve of $80m plus costs for the rest of the claim (in the US) and that wont be repaid back in multiple life times of increased premiums.

"Fault" is a very poor choice of term and I think a better one could have been chosen and would cause less debate but as you've found out it means a net outlay and so theft, fire, vandalism etc are all also "fault" claims unless the perpetrator can be found and has the funds to repay. It is often mistaken for "blame" or "liability" but its not the same.

There are several insurers out there with various "promises" like Direct Line who offer slightly different treatment to incidents involving unidentified/uninsured third parties or vandalism but 

Sandtree

Merlin139 said:

My understanding of protected No Claims would be that 1 claim would not effect your PNCB

1 claim wont impact your NCD, it does impact your NCDP as it uses a "life".

The issue is that your NCD may be a 50% so with the protection you still get 50% off after using up a life but there is nothing to say that the underlying premium wont go up 60% as a result of the fault claim.

dunstonh

That's £222 extra. They say this is because i have a claim ongoing. The claim is for a minor dent cause by an unknown person reversing into my car. This was done whilst we were away from the car.
Because the person is unknown it is classed as not recoverable and shown as AT FAULT.

The term "at fault" really means they have not been able to recover it from the third party or their insurer.  it doesn't mean you are are at fault actually but that your policy has suffered the monetary loss.

I will be cancelling the claim and paying privately.

Unfortunately, it now becomes notifiable to any alternative insurer.  However, you would be able to put £0 in the cost box.  So, it won't hit the premium hard.

Whist i appreciate the process you have described i can not help but feel hard done by. So when the perpetrator is not known, the insurance company can not recover money from the perpetrator, so they increase the premium to cover their losses. 

Correct.  That is how it works.  If you proceed with the claim, you are no longer the low risk person you were.  So, you get priced accordingly.  Its unfair that the person that did it gets away with it but its logical in terms of insurance pricing.   You are now in a pot of people with a claim against them and your pricing is measured on the average of that pot.  Some of those claims may have been low-cost to the insurers, some would have been eye-watering expensive.

SixSigma

Thank you all for your input, it is much appreciated. I accept that the rules mean that i will take the hit this time and at every renewal.
I understand that Insurance companies are a business and as such must make money to operate.
However from your information it seems that the insurance companies are not customer oriented and do not have a fair approach to individual customers. The objective is to operate at a profit and not to create customer loyalty or satisfaction or even to provide a service to the population. 
Penalizing customers who are absolutely innocent is not being customer focused and i suggest that this need to change 

Sandtree

SixSigma said:

Thank you all for your input, it is much appreciated. I accept that the rules mean that i will take the hit this time and at every renewal.
I understand that Insurance companies are a business and as such must make money to operate.
However from your information it seems that the insurance companies are not customer oriented and do not have a fair approach to individual customers. The objective is to operate at a profit and not to create customer loyalty or satisfaction or even to provide a service to the population. 
Penalizing customers who are absolutely innocent is not being customer focused and i suggest that this need to change 

Insurers are, on the whole, private companies and therefore do have a legal duty to their shareholders. They do however provide some element of stability because whilst here you will see discussions on insurance behind the scenes insurers cede some of the risk to reinsurers who in turn retrocede risk to other reinsurers and so when there are major events like Katrina insurers paid out over $41,100,000,000 in claims meaning businesses could survive, home be rebuilt etc etc. The reinsurance market enables insurers to survive those sorts of losses.

Profitability and customer loyalty/satisfaction are linked, it costs less to retain a customer than it does to attract a new one however in this you also have to consider customer behaviour (remember this site is owned by Money Supermarket who heavily promote promiscuity and buying on price to insurance customers) and insurance is widely accepted to be a heavily commoditised distress purchase. In the last year how many people have you heard bragging that they decided to by a top tier Home or Car insurance policy this year -v- how many saying how much they saved on their premiums? (rhetorical question).

As I say, an increase in premium for next year is not intended to cover last years losses at an individual level. A new customer would see the same £222 higher premium with a new business quote as you are even though your insurer suffered no loss as they were not the insurer that paid out that persons claim. Insurance does work on the concept of the common pool and insurers are legally required to ensure there is sufficient funds in the pool to cover the liabilities (or have transferred it to acceptable reinsurers) which means good risk assessment for future risk and replenishing the pool at a universal level following overall bad years.