Canceling car insurance is easier than many people realize. To reduce the risk of this happening, NimbleFins, data-driven personal finance experts who have compared the best car insurance companies in
“No one wants to have their car insurance claim denied, but it’s all too easy to inadvertently invalidate a policy. With the cost of living crisis stretching budgets to the breaking point, we’ve compiled this list to make sure drivers don’t miss out on the compensation they’re owed.”
Erin Yurday, CEO, Co-Founder and Editor of NimbleFins
1. Wrong class of use
The usage class describes how the policyholder uses their vehicle. For example, Social, Home and Pleasure (SDP) is for drivers who only use their cars for recreational purposes, such as driving to the shops or visiting friends and family.
What many drivers don’t realize is that SDP doesn’t cover commuting or driving to the station to get to work. So if a policyholder with SDP as their usage class has an accident on their morning commute, any claim they make may be rejected.
For the policy to be valid, the class of use must reflect the activities for which the vehicle is used; in this example it would be Social, Home, Pleasure + Travel (SDP+C).
2. Failure to update personal data
Auto insurance premiums are based on the policyholder’s risk profile, which is determined by a number of factors, including:
– Age and occupation
– The value of the insured car
– Class of use
The greater the perceived risk of a claim occurring, the higher the premium is likely to be. For example, moving to a new neighborhood presents a different risk of car theft.
This is why it is important that the policyholder details are accurate. If any of these details are wrong, the policy will not be an accurate representation of the risks the driver faces – automatically voiding the policy.
3. Underestimating mileage
Insurers often ask about annual mileage, which helps them calculate risk. While insurance providers do not expect policyholders to be 100% accurate, they do expect estimates to be within reasonable parameters.
Policyholders who grossly underestimate the number of miles they cover can cancel the entire policy. Based on this, NimbleFins encourages all policyholders to think about the trips they take and how they add up in terms of miles.
4. Letting unnamed drivers behind the wheel
Car insurance only covers the vehicle and the drivers named on the policy – no one else should drive the car, even in an emergency.
The only exception is if another driver has car insurance that includes ‘driving other cars’ (DOC). However, it is important to note that DOC only provides third party insurance regardless of the driver’s level of coverage. For example, if someone has comprehensive insurance with DOC cover and is involved in an accident while driving a friend’s car, the insurer will only pay for third party property repairs and the car driven will not be covered.
Misrepresentation is when the policyholder intentionally misleads the insurer in order to obtain cheaper car insurance; a prime example of this is the practice known as fronting.
Fronting usually occurs when an older and more experienced driver claims to be the primary driver when they are not. In most cases, the actual driver is a younger, less experienced family member.
Policyholders can also mislead insurers by not disclosing facts of which the insurer should be aware and which could affect their quoted premium. This includes having penalty points or making a recent claim.
Depending on the specific circumstances, misrepresentation and non-disclosure can be classified as insurance fraud, which can result in prosecution and imprisonment.
Consider the needs carefully to avoid voiding your car insurance
The overall message from the NimbleFins CEO is that:
“With all contracts, the devil is in the details. Motor insurance policies are no different and policyholders must pay attention to the terms and conditions stated or risk voiding their cover.’
Whether drivers are purchasing their first policy or renewing, NimbleFins strongly recommends that consumers shop around to find the best cheap car insurance for their needs and budget. Auto insurance is an extremely competitive market, and even though premiums are starting to creep up, there are still deals to be had. A helpful place to start is with the list of the largest auto insurance companies.
Contact with the media
Contact person: Erin Yurday
Email: Send an email
address:NimbleFins Limited Ground Floor