Why reporting a minor crash to your car insurer even when you DON’T claim could cause your premium to soar
Central database keeps records of all calls and insurers are using the information to hike your premium
MAKING just one call to your car insurer to inform them of a minor scrape - even if you don't claim - can hike your premium.
Insurance firms are using a central database called the Claims and Underwriting Exchange (CUE) to track incidents that don't normally appear on your history.
The database keeps calls on record for SIX years with thousands of customers phoning up each day to flag up incidents but never submitting a formal claim.
It applies to car, home and personal injury cover with travel insurance due to be added to the list later this year.
CUE was initially set up to help prevent fraud to ensure customers were honest when giving a new insurer details about their past.
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But insurers are now increasingly using the database to set premiums and are taking into account the "notification only" reports to raise prices.
And policyholders are stuck in a "no-win" situation according to experts as customers are obliged to report any incidents that "may give rise to a claim" even if you never pursue it further.
This could include a minor car parking scrape, a slow speed nose-to-tail bump or paint chips.
Martyn John, a GoCompare spokesman, told : "People are stuck in a no-win situation when it comes to reporting incidents.
How to avoid the increases and get the best deal
Here's how drivers can avoid shelling out a fortune:
- Don’t auto-renew as rolling over your policy with your insurer means you’ll pay more than you need to. Shop around for the best deal using a comparison website and challenge your existing provider to match the best deal you find.
- Add an extra driver to your policy. It is illegal to claim someone is a main driver when the’re not, but adding a secondary driver can save you money without breaking the law. Ideally the second driver would be someone with a clear driving licence and good no-claims history.
- Pay your premium in full if you can afford to stump up the cash outright. Insurers usually whack on a hefty interest charge for monthly repayments so you can make a significant saving by paying upfront.
- Consider fully comprehensive over third-party – full cover is often cheaper.
- Get a black box policy. These offer incentives and reduced premiums for young drivers who are careful on the road.
"On the one hand, insurers will expect customers to report any incidents they have, but by doing so it’s possible their insurer may see them as a higher risk and hike their premium at renewal regardless of whether they have actually made a claim or not."
Ashton West, chief executive of the Motor Insurance Bureau, which manages the CUE, added: “What insurers do with that detail, and how they underwrite a given risk depends on their individual underwriting rules and rating engines.”
Premiums have already surged over the last year by £90 with drivers hit hardest in the North East thanks to increases of Insurance Premium Tax and law changes on personal injury payouts.