A recent study has uncovered that over a third of motorists are out-of-pocket following an accident that wasn’t their fault.

A study by the RAC of 2,062 drivers carried out earlier this year showed that many of us unfortunate enough to find ourselves involved in an accident not of our making are footing the bill not only for insurance policy excesses following a ‘no-fault’ accident but often in alternative transportation, loss of earnings, and pursuing personal injury claims.

Often, drivers are unaware that a no-fault accident can cause their premiums to rise, so come time to take out another year’s motor insurance, people can be in for a nasty shock. Even if you don’t make a claim, but only tell your insurer as you’re told to do, your file will get updated with a ‘notification’, often resulting in a hike in future premiums. Are drivers being penalised for their honesty?

Paying for another’s mistake

Insurance companies class claims as ‘no-fault’ when the costs resulting from an incident get paid by a third party. Imagine you’re stationary at a junction when a car ploughs into the back of you. As long as the driver doesn’t speed off without you having any record of their number plate — and the insurance investigation finds the other driver to be at fault — you can seek payment for any damages from their insurer instead of your own.

One-fifth of the motorists questioned in the RAC survey admitted to being in a car accident within the past five years, with 69% of these people saying they weren’t at fault. Of the people who answered, 21% had to pay an insurance policy excess, with 41% of those paying out between £150 to £349. Eight percent of respondents needed to spend money on alternative transport because their car was no longer roadworthy, with the average cost being £588. A further 4% of people suffered a loss of earnings. The biggest loss of earnings recorded in the survey was £3,091. Three percent paid to make a personal injury claim with £2,036 being the average cost.

To add insult to injury, many insurance providers will raise car insurance premiums by up to 30% for one non-fault claim, and 50% for two non-fault claims. Bearing all this in mind, should drivers be adding legal expenses cover to their policies?

The cost of policy excesses, travel expenses, and claiming personal injury could get taken care of when a person has legal expenses cover, but not every driver agrees it’s necessary to have.

No-fault claimants pose a higher risk to insurers

Those involved in a no-fault accident will notice a rise in their car insurance premiums, which many motorists feel is unfair. So how is this justified? Insurance providers argue the reason they hike up premiums in these situations is that statistics show people involved in any motor accident (whether no-fault or at-fault) pose a higher risk of having another accident later.

Your ‘no-fault’ accident might bring to your insurer’s attention something they didn’t know, that they consider risky. Things such as regular parking in a crime hotspot, driving through busy junctions each day or driving to work along country roads with poor visibility and high-speed limits.

Association of British Insurers (ABI) Manager for General Insurance, Rob Cummings, 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.”

Another painful disappointment for many motorists is finding out they’ve lost their no-claims discount. Insurers may say, a no-claims discount is that — a discount for not making a claim, regardless of if the claim results from another’s fault.

The ABI says you should make your insurance company aware of any incident even if you don’t make a claim. If the incident involved another party, they could make a claim against you at a later date with symptoms of alleged injuries appearing much later.

It’s tempting to keep quiet about certain incidents, questioning why we should be forced to pay higher premiums, often for years, when an accident wasn’t our fault. However, failing to tell your insurer of something they later discover, could invalidate your policy, causing them to not pay out on any future claims.

Keeping costs down

Can motorists act to prevent a rise in future premiums when making a no-fault claim?

Although there’s little you can do to influence an insurer’s decision when making a no-fault claim, you can shop around for a provider who won’t hike up premiums for notifying them of an incident. Some insurers will ignore the first one or two no-fault notifications, while others will discount all no-fault notifications.

As well searching for the best car insurance quote (price comparison sites help make the search easier), there are other ways to reduce your car insurance costs:

  • Add a named driver to your policy — having a more experienced driver on your policy, (that uses your car) could help spread the risk.
  • Consider making your next car one that’s in a lower insurance group
  • Decide if you need added extras on your policy — things such as a courtesy car or windscreen cover might not be necessary for you and having them can increase what you pay.
  • Increase your voluntary excess — as long as you can afford to pay it should a claim arise.
  • Protect your no claims discount — this may cost more, to begin with, but can save you money if you need to make a claim.
  • Pay for your insurance in one lump sum — paying monthly will cost you more overall. Many insurers will charge their customers interest for paying in instalments.
  • Take the Pass Plus advanced driving course — more so if you’re a new driver. Although not every insurer offers discounted rates for drivers with a Pass Plus certification, many do. I took the Pass Plus course, back in the day and it’s paid for itself.
  • Consider using telematics (black box insurance) – this technology records how safe a driver you are you and adjusts your premium in line with the results.

Do you think it’s fair for insurance companies to raise future premiums after a no-fault claim or notification? Has this ever happened to you? Would you risk not informing your insurer if a no-fault incident was paid for by the other driver and cost nothing to your insurers? Let us know in the comments.

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