How drivers see their insurance costs soar after no-fault accidents even if they don't claim – This is Money

By Rachel Rickard Straus for


Furious: Sharon Routledge has seen her insurance premium rise after an event that was not her fault and for which she didn’t claim
It was the middle of the night in November when Sharon Routledge was woken by a strange noise. She peered out of her bedroom window and was horrified to spy two men stealing the alloy wheels on her car.
‘I chased them up the road (wearing not a lot I realised afterwards) and we simply put all the wheels back on the car and all was fine,’ she said.
Not for a minute did she think the episode could affect her insurance premiums. But like thousands of drivers who have been involved in an incident, she later found it cost her dear. 
Sharon didn’t make a claim on her car insurance as there were no losses or damage. But she did notify her insurance company Admiral as they ask customers to report all incidents. 
She thought nothing more of it until more than two years later she added another car to her policy and was told that the premium would be higher because there was an ‘incident’ on her other car in 2012.
‘The ‘incident’ was not my fault, I didn’t make a claim but still my premiums have risen,’ says Sharon. Surely this is not allowed.’
The episode is one of a number seen by This is Money in which drivers see their premiums rise as a result of an accident that was not their fault and for which they did not even claim.
The policy, adopted by many car insurance companies, means thousands of cautious drivers end up paying for the mistakes of other more careless drivers through hiked car insurance premiums.
Drivers complain of being penalised for their honesty – after all if they don’t tell their insurer they might never find out and their premiums remain unaffected.
It disincentivises drivers from reporting incidents – something all drivers are told to do – because it could lead to an increase in their insurance costs. 
Not all insurers have this policy; some do not increase premiums at all for drivers who have been involved in an accident that was not their fault and for which they did not claim. Others overlook the first one or two.
How can insurers justify hiking premiums for blameless drivers?
Admiral is one insurer that bumps up premiums after just one non-fault accident. It claims it is justified in doing so because those involved in one are more likely to be involved in another accident later on.
‘We use many years of claims data from millions of claims in order to accurately calculate the risk of a customer going on to make a claim,’ a spokesperson said. 
‘Our claims statistics show customers who have had a non-fault claim are more likely to make a claim in the future, compared with customers who have not had a non-fault claim. 
‘By having a non-fault claim our customers fall into a category that we see as a higher risk to insure.
‘We rate on the fact an incident has occurred, whether they have claimed or not.’
It added that changes to premiums as a result are applied at renewal and not during the policy, unless a customer has not disclosed an incident when they took out the policy.
Insurers argue that someone who has had an accident is more likely to claim again for many reasons. It could reflect on the types of places that they are driving – perhaps they frequent some awkward intersections. 
It could also say something about where the car is parked. One insurer suggested that alloy wheel thefts often come in spates in certain areas – an attempted theft would make a successful one more likely. However insurers already tweak premiums according to postcode, so this should already be priced in.
It could also say something about a motorist’s driving habits; perhaps they drive in ways that are more likely to result in an accident even if they didn’t directly cause it.
Will all insurers hike premiums?
Sharon’s 17-year-old daughter had a similar experience with Diamond, part of the Admiral insurance group. 
‘Georgie was stationary when a car drove into her causing around £1,500 of damage,’ said Sharon. ‘The driver did not want to go through her insurer so she paid the garage direct for all of the damage. I notified Diamond as I was told I needed to inform them of any incidents. Now they have increased her premium and said there was no way of appealing. 
‘This is unfair as it was a no fault accident, which was paid for totally by the other driver and cost nothing to any insurers.’
Penalised: Peter Hardey has seen his insurance premiums pushed up, in part because of an incident involving his car for which the other driver took full responsibility
What’s more, if a driver like Georgie who is involved in an accident that is not their fault decides to shop around, they may find that other insurers quote them a higher premium as well.
It all comes down to a little-known supercomputer called the Claims and Underwriting Exchange (CUE), a massive database containing 32 million claims records that is shared by all insurance companies.
If you’ve had a break in, it’ll be on the database, or if you’ve changed job, got married – or even if you’ve phoned your insurer to ask what your excess is, it could be noted on your file.
It was set up to help keep down premiums for honest policymakers by preventing multiple claims, frauds and lies about claims histories.
But what was set up for this purpose is now exploited by insurers to help them set their premiums.
There are three types of notification that can be put on your file; a ‘fault claim’, a ‘non-fault claim’ or a ‘notification’ only. An accident that was not the driver’s fault and for which they did not claim would count as a ‘notification’.
How insurers use this information will vary from one to the next and is one method they use to keep themselves competitive.
Evidence: Peter Hardey took pictures to show the damage done to his car following the incident
A spokesperson for the financial ombudsman explains: ‘Some insurers do rate on notification only incidents where no claim has been made, but it usually won’t increase the premium as much as a non-fault claim, which in turn does not increase it as much as a fault claim would.’
However most drivers do not know the policy of their insurer on this until the end of the renewal process, often once they have plugged in all their details and are close to the payment stage.
Price comparison websites do not generally reflect this information in their headline prices either.
Can you fight back?
For drivers who see their premiums rise in this way, there is very little recourse available other than switching to a different insurance provider that would not hike premiums.
Peter Hardey from West Sussex is considering legal action after his car insurance premium jumped 50 per cent and his partner’s by 25 per cent the year following a collision that he says was not his fault.
Peter’s partner Lynne was driving his Lexus when it was driven into by a BMW. The other driver’s insurer paid out for all the repairs. But despite having nearly 90 years of no claims between them, Peter and Lynne have seen their premiums rise.
‘The blemish could stay on our record for five years, pushing up our premiums. Why should I have to pay what could amount to £900 extra over this time?’ Peter said.
Peter recognises that he can shop around, but says he doesn’t see why he should have the inconvenience of moving away from an insurer with whom he has been for years.
He is considering taking the other driver to the small claims court to recover the difference in premiums.
However he may encounter problems proving that the increase is solely down to the accident or in proving a future loss.
A spokesperson for Admiral explained that the non-fault claim has had some impact on his premiums, but the increase isn’t just down to this.
‘We are constantly updating our rates, which means the price can increase or decrease from one year to the next even with the exact same details, a spokesperson said.
‘We provide our renewal prices in advance so a customer has the opportunity to shop around if they are unhappy with the price.’
Insurers routinely use information held about you on the Claims and Underwriting Exchange database to help calculate what they will charge you for home, motor or personal injury insurance, whether it is a notification or a full claim.
But you are legally entitled to see what details of yours are included on the database. To access your records, complete a subject access request form.
It costs £10 and can be found online at the Claims and Underwriting Exchange website. Written requests are also accepted, but customers must provide ID, such as a utility bill or council tax bill and include their date of birth, any former or maiden names and address information covering the past six years.
This, along with a £10 cheque or postal order made payable to IDSL, should be addressed to IS & Compliance Officer, Insurance Database Services Limited (IDSL), Risk & Compliance, Linford Wood House, 6-12 Capital Drive, Milton Keynes, Buckinghamshire MK14 6XT. 

So who doesn’t hike premiums?
It is always worth shopping around if you’re in this position – finding an insurer that does not hike premiums for notifications only could make a real difference to your insurance costs.
One insurer that does not is Co-operative Insurance. A spokesperson explained that it would not increase the underlying premium or change a no-claims discount if the customer was not at fault and did not claim.
However it added that premiums could change from one year to the next for other reasons.
Meanwhile Direct Line said that it wouldn’t raise premiums the first time but if the driver continued to make non-fault claims it could start to factor it in as it could indicate something about their driving habits.
Why do I have to report non-fault incidents if I’m not even making a claim?
All insurers will state in their terms and conditions that customers must report incidents regardless of whether they make a claim.
A spokesperson for the Association of British Insurers explains that this is for two reasons. One is to alert your insurer to the possibility, if the incident involved another person or their property, that there could be a claim made against you at some point in the future, for example where an injury becomes apparent or symptoms alleged sometime after the original incident.
The second reason is that some insurers may have statistical data that shows someone involved in an incident claims data is more likely to subsequently claim.
Everyone pays: In the event of an accident, the party responsible will generally pay out but the other driver may also see their premiums hiked as well
Rob Cummings, ABI Manager for General Insurance said: ‘Insurers consider a range of factors when setting the price of a customer’s motor insurance premium, including age, type of vehicle, postcode, claims history and driving record. Insurers claims data demonstrates that if a customer makes a ‘non-fault’ claim, they are more likely to make an actual claim in the future. As such, some insurers will consider this when setting the price for customers.’
While there is nothing illegal about this practice nor anything against the rules, it does raise questions about how much information insurers should be able to use to set premiums. 
Those who are involved in accidents purely out of bad luck and through no fault of their own are having to pay out extra and there is nothing they can do about it. 
There is precedent for insurers being banned from hiking premiums for some people statistically at higher risk of accidents: following an EU ruling in 2012 insurers cannot charge men more than women for car insurance even though they are more likely to claim. 
But what if I do not report a non-fault incident?
If you do not report an incident and your insurer later finds out, they may claim that your policy is invalid and refuse to pay out on future claims.
In this case, it would be up to the insurance company to prove that it would not have covered you, would have charged you more or would have offered a lower level of cover had it known about the incident.
A spokesperson for the financial ombudsman added: ‘The way insurers calculate their premiums is their own commercial decision, provided they treat everyone in the same situation in the same way, and if consumers are asked about incidents and losses then they should disclose them whether they’re recorded on the insurance central database or not.’ 
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