Insurance Changes

Cunobelin

A news item today covered the "con" of putting a youhg driver as a "named driver" on the parents insurance and then driving their own car on this insurance rather than insure independently. The Insurance companies are pointing out that if they find this is tha case they will not honour the Insurance - practically making the car uninsured in thecase of an accident!


http://news.bbc.co.uk/1/hi/programmes/inside_money/7053307.stm

Now Norwich Union is to stop "other car" insurance to avoid this "con" and also the ne of taking out insurance on a low insurance car and then driving high insurance vehicles on the other vehicles permit.

Several other are apparently likely to follow suit and also ban this practice.

Is specific insurance for specific individuals in a specific vehicle a way forward?

alfablue

The first one (parents insure the car, child as named driver, but its really the childs main use car) is is known as "fronting up" and has been "frowned upon" by insurers for years. Usually the expectation is that a named driver is not the main driver of a vehicle.

Cunobelin

"Fronting" was an example given today was that a student driving a car in a University town miles away from the parent who held the insurance must by definition be the main driver - this would invalidate the insurance as a "fraudulent application". Any insurance claim could be refused on these grounds.

cabledonuts

As far as the policyholder is concerned it's deliberate misrepresentation of a material fact, ie a parent takes out a policy giving the impression to the insurer that they will be the main driver when in fact their child will be the main driver. They have not provided the insurer with the correct information (material fact) with a view to obtaining a policy for a lower premium. Any insurance company will void any policy if it transpires that the insured has misrepresented their application by not providing all the material facts. Another common occurrence on car insurance applications is to say your vehicle is garaged overnight when it isn't. I bet there are plenty of people reading this who have done the same to obtain a policy for a lower premium.

nwallace

When I was 21 I had "Other Car" Insurance, then the next year the age limit changed from 21 to 25 so I only just got it "back" this year. Useful as my car has been at the garage for the last 3 months getting some rusty joints replaced.

Was a named driver on my first car for a while, until I got a job and started using it for commuting, Dad changed me to Main Driver, thankfully then 20 it wasn't as bad as the quotes for me when I was 17, but it was still over a grand a year, something I could not have afforded myself, (Then again as I was still a student on placement I couldn't afford petrol either.)

Then I got another car and then a job that I can commute to by other methods (the place has showers and a bus service) now the thing sits and rusts in the drive most of the month. Though at £222 quid for insurance and £190 for tax I think I spend more on the legal bits than actually running it.

And despite all that, It still costs me less to have a £100, Group 14 car first registered in 1983, kept in good condition than it would cost me to buy a new one. By my reckoning I've spent 6k on it, including fuel. I would have lost more than that in fuel, depreciation and interest payments in the last 3 years

Having "investigated" the difference in storing a car on road, driveway, carport or Garage. Where I live it seems to make no difference. Though as my insurance cost appears to be the same as that of insuring the car with Lancaster Classic (which wouldn't accumulate NCB or allow NCB protection) I suspect the age of my car may be part of that equation.

spen666

Cunobelin wrote:

"Fronting" was an example given today was that a student driving a car in a University town miles away from the parent who held the insurance must by definition be the main driver - this would invalidate the insurance as a "fraudulent application". Any insurance claim could be refused on these grounds.

not a 3rd party claim.


The insurance company would still have to pay out on any claim by a 3rd party injured by driver in this situation. The Insurance company can pursue the driver/ "insured" for the cost of the claim, but this is seperate issue .

An insurance company cannot get out of liability to a 3rd party in these circumstances

spen666

cabledonuts wrote:

As far as the policyholder is concerned it's deliberate misrepresentation of a material fact, ie a parent takes out a policy giving the impression to the insurer that they will be the main driver when in fact their child will be the main driver. They have not provided the insurer with the correct information (material fact) with a view to obtaining a policy for a lower premium. Any insurance company will void any policy if it transpires that the insured has misrepresented their application by not providing all the material facts. Another common occurrence on car insurance applications is to say your vehicle is garaged overnight when it isn't. I bet there are plenty of people reading this who have done the same to obtain a policy for a lower premium.

This could be an offence under the fraud act 2006 - carrying up to 10 years imprisonment on a conviction on indictment

popette

Insurance is a rip off. My husband's shed on wheels was stolen from outside our house at night while we were in bed. We heard the helicopters chasing it as the joyriders razzed about town. They were caught and prosecuted etc. A few weeks later we got a letter through from an insurance company. It turned out that while they were out driving the car, they ran into another car, the driver of which was making a claim. Even though they had the fools who had stolen the car, the claim was against my husband, as it was his car. He had to pay the excess on his policy. The insurance company just told us that it was easier to claim the money from us than to pursue the criminals. How can that be right???? :evil: :evil:

Insurance company's take a risk in insuring us but they stack the odds so that they rarely lose. I know that they're not charities but they do seem to take the p!ss a bit.

formerlyknownasbonj

The trouble with it is, and why companies have to use cut-and-dry methods to avoid it e.g. not allowing "other car" insurance (whatever that is), is that it's difficult if not impossible to prove who's the "main" driver. If there even is a definition of "main". Obviously one method is the fact that the car is registerd in the youngster's name, but this is obviously stupid - if you're going to front up to save money at least do it properly and put it in the parents' name.

Sub3_99

The problem is that main driver insurance for a new driver is prohibitively exensive. If third party insurance were made part of the annual VED fee (with the actual cost recouped in additional petrol/diesel duties), then this problem would not arise as parents would not need to lie to insure their offspring's vehicles. The choice would then be to insure the vehicle comprehensively (which would still be prohibitively expensive), or just to go for simple fire & theft insurance which should not be so.

Jon G

Sub3_99 wrote:

The problem is that main driver insurance for a new driver is prohibitively exensive. If third party insurance were made part of the annual VED fee (with the actual cost recouped in additional petrol/diesel duties), then this problem would not arise.

That would in effect make the state the monopoly motor insurer. Would it be as cost-effective as competing insurence businesses?

This would put a stop to uninsured driving (except of wholly unregistered vehicles), but how would it stop insurance being expensive for new drivers? Presumably the state insurance agency would still charge premiums according to risk ? If it charged at flat fee to ever driver regardless of risk, that would remove a major incentive for accumulating a good driving record, and thus remove part of the motivation for careful driving.

Jon

spen666

Jon G wrote:

Sub3_99 wrote:

The problem is that main driver insurance for a new driver is prohibitively exensive. If third party insurance were made part of the annual VED fee (with the actual cost recouped in additional petrol/diesel duties), then this problem would not arise.

That would in effect make the state the monopoly motor insurer. Would it be as cost-effective as competing insurence businesses?

This would put a stop to uninsured driving (except of wholly unregistered vehicles), but how would it stop insurance being expensive for new drivers? Presumably the state insurance agency would still charge premiums according to risk ? If it charged at flat fee to ever driver regardless of risk, that would remove a major incentive for accumulating a good driving record, and thus remove part of the motivation for careful driving.

Jon

If costs are recovered in additional petrol duties, then unless running your car on for example chip fat/ red diesel etc even unregistered cars would be caught.

Cunobelin

Shouldn't one ask why insurance is high for young drivers?

The cost of these drivers to the insurance companies is reflected un the higher premiums. They have more accidents and hence pay more insurance.

Or should we be asking the 50 year old with no points, noaccidents and a no claims bonus to pay a subsidy to the little darlings?