Car Insurance - Why it's time to take a stand.
There are certain rites of passage as we grow into adulthood - things we undergo and accept as being natural as our bodies and mind change and develop. For some of us, our voices grow deeper. We grow hair where there was no hair before.
There are certain rites of passage as we grow into adulthood - things we undergo and accept as being natural as our bodies and mind change and develop. For some of us, our voices grow deeper. We grow hair where there was no hair before. But one thing we all have in common is that we pay higher car insurance because everyone tells us we’re more dangerous on the road statistically-speaking than anyone else. As a youngster with no relative experience, we accept this as truth and move on in the hope that one day we will reach 25 - the fabled and magical age at which we apparently become responsible and our premiums drop to a more normal level.
For ten years I have paid anywhere from 10-25% of my annual income on car insurance. I have willingly put money into a pot firm in the belief that it is for my own good, as well as being a legal requirement in the UK. I’ve seen headlines come and go and been outraged at the various reasons we’re told our insurance premiums are going up. Collectively, we’ve laid the blame at young people, old people, men, women, fraudsters exploiting false injury claims and even immigrants in a series of profiling campaigns that are frankly unacceptable in any other industry. We’ve accepted the rise upon rise of premiums as necessary and normal, safe in the knowledge that we’re storing away for our own safe-keeping.
In July this year, I was unfortunate enough to be involved in a collision and I found that I needed to dip into the pot in which I have paid thousands over the years in incident-free driving. My experience in doing-so has highlighted some glaring inaccuracies in what we’re told and the laws and legislation that allow these companies to work relatively unchecked.
Firstly, just to make one thing absolutely clear - the only people at the cause of your insurance premiums going up are the insurers themselves. We’re told that premiums go up based on trends identified in their statistical data. So let’s take a look at where insurance companies get their statistical data from - the ‘central database’. Information on the specifics of this database are predictably obscure and vague, with few google hits referencing anything directly. In fact I only found one direct quote which essentially said that the system is so complex that even they can’t explain it, such is the sheer amount of data held within it. This ambiguity allows insurers to essentially attach any statistical trend to our premiums without really giving them any context or evidence. In real-world terms, what this has allowed insurers to do is to raise premiums regardless, giving us a different reason each time.
Let’s talk specific examples - the ones that hit us in the wallet every year. We’ll start with the common misconception that false injury claims are responsible for the hike in the premiums we pay. Following my incident in July, I was forwarded by my insurance directly to a contracted solicitor. Within an hour of reporting the incident, I had seven different phone calls from people requesting that they be the ones who pursue my injury claim. Most notably, that included the insurer of the third party. Even as I write this in October, there isn’t a day in the week where I don’t get canvassed by someone offering to pursue my claim. ‘But why?’ I hear you cry. Well, it’s simple and it’s made even simpler on a clear-cut incident like mine where the outcome is obvious. As many solicitors do, they work on a ‘no win, no fee’ basis. When they know they’re going to win, they know their own costs will be covered and they will get 25% of any settlement fee as a bonus. The industry revolves around people pursuing injury claims, false or otherwise - the insurers are engineering their own increase in premiums.
So now let’s take a look at how my life as an average Joe has been affected since. Well, I was only given roughly half of the agreed value of my car (which was insured on a fully-comp policy with all mods declared and covered). This meant I was not able to buy another similar car, so now instead of driving a modified, track-ready Mazda MX5, I drive a completely standard Suzuki Ignis. Not exactly ‘like for like’. Insurers agree upon themselves the value of your vehicle, so are under no obligation to honour the value you both agreed when you took the policy out. You can ask for an ‘independent engineer’ (who oddly enough are requested by the insurer) but their opinion is final.
The main thing, however, is that my own premiums have now increased by 50% even though I wasn’t at fault. This is where it gets important.
If we go back to the central database and its impossibly complex algorithms that are far too complicated for us mere mortals to understand - their statistics show that anyone with a non-fault claim is more likely to have an at-fault claim in the following five years. They argue that to support this data, there are several flimsy reasons they can attach to this belief that you and me are forced to buy into, such as the roads you use or the way you drive (which surely are behind any claims?). If you consider that on average, a ‘full’ no-claims bonus entitlement (‘NCB’ of five years) discounts around 60% of a premium, then of course by then increasing it by 50% following a non-fault claim, your NCB is essentially in name only. Doesn’t sound legal does it?
So who regulates the insurers to stop scams like this? The Financial Services Authority (FSA) of course, who put out a disclaimer stating that they have no influence over commercial business decisions (such as how much to charge), they can only intervene if people are being discriminated or unfairly treated - something car insurers build their business on!
I took the liberty of pulling some publically-available statistical data this morning from 2013-14 Police records in my local area which would hopefully explain why my house insurance is five-times cheaper than my car insurance despite a financial value difference of £112’000. Rather predictably I found that house-crime was four times as prevalent as car-accidents and significantly more common than vehicle-crime, so there’s absolutely no logic or reason as to why my car insurance premiums are so high. Well, apart from one reason. House insurance isn’t mandatory in the UK. Car insurance is.
Car insurance is a racket. It’s time we put an end to it.
Comments
Good peice. Just a word of warning. be prepared to be taking those calls for a long time to come. I had somone come into the side of me 2 years ago and I still get at least one every week which is down from 3 or 4 a day for a year. I told every single one that called that I’m not going to lie for money and please take me off the register but i still get them. I have a block list with like 100 numbers on and they still get through. It’s an absolute menace.
There’s no doubt that someone makes a lot of money by selling your details on!
These insurance monkeys are like a Mafia i swear. Ridiculous how much you have to pay and how little you get back.
Fully agree with you, I hate that young drivers are forced to pay stupid prices with no alternative options.
Wow, it looks like there is something in Hungary that kind of works, but in other countries it’s totally messed up! The basic insurance does not cover your own damage, only the damage you cause, so if I’m the one who did nothing wrong, and someone else caused the accident, it is his insurance company that is going to pay me. One idiotic rule is that the repair can’t increase the value of the car, so usually you still lose money, even if you weren’t at fault, and this is disgusting
We have that here as well - ‘third party’ cover. It used to be that it was cheaper to buy than ‘fully comprehensive’ cover, but these days it often isn’t the case.
In the land of australia, basically u have a mandatory or compulsory third party insurance CTP, and if u want you can pay more and get comprehensive which covers you as well. CTP for a new driver in a bmw 330Ci is 400 and something a year, but comprehensive is more like a few grand but if u are hit then you are fine regardless of which option because when you register your car you automatically pay for CTP.
If you have a spare ~£3,000,000 you can start up your own insurance company…
in Canada young drivers also pay way more but young males are waaaaayyyy more to insure than females, so figure that one out.
That was the case here also until an EU ruling put an end to it in 2012.
Its ridiculous, I’ve seen female classmates get into multiple accidents, and their premium is no where near mine is and I’m accident free….
Classmate of mine has been driving his truck around uninsured for a little over 4 years. Never got a ticket or in an accident until last year. Other driver was at fault. His truck was pretty badly damaged.
He gets out of the truck and the other driver is panicking. So my classmate (“Joe”) just kinda waves at him to calm down and tells him to just write a cheque to cover repair costs. Gets a cheque for $2000 shakes the guys hand and calls me to tow his truck back home. We repair it for about $800 (new axle, diff, truck bed door, chassis examonation to make sure it wasnt bent and a quick coat of paint).
So lets recap… He is saving about $150 per month on insurance because the sneaky a-hole doesn’t pay it (illegal but whatever… His choice). That’s $7200 over 4 years. His truck is worth maybe $3k (older Ford Ranger).
If it was completely destroyed in that crash, he could turn around and buy TWO NEW TRUCKS for the same amount he saved over the 4 years.
Yah… That’s how they handle it in northern Ontario, appareantly XD
#SorryEh
I hate uninsured motorists. You get hit by one and its all on you now. We get plenty of people coming into the shop that have been hit by the uninsured and they always get the shaft while the uninsured get a slap on the wrist. Makes me sick.
“That’s $7200 over 4 years. His truck is worth maybe $3k (older Ford Ranger).If it was completely destroyed in that crash, he could turn around and buy TWO NEW TRUCKS for the same amount he saved over the 4 years.”
But remember that you pay for your insurance that when YOU are at fault, they can take YOUR money and pay for the “victim’s” damage, not YOURS.
The only thing I love about Egypt is its insurance system, basically there is mandatory insurance that you pay while licensing your car, and the normal one that covers all your car from normal firms, basically the mandatory one is if you are at fault, you pay the damages, if not at fault you get paid from the other owner.. Easy right? While the other optional one is a fraud, you pay a thousand every year and if something happen they dont pay..
I thought in Ontario you had to have insurance before they issued a license plate? Or is that ServiceCanada place in my city lying to me?
And the tow truck driver is required to call the police if he is called to tow a wreck it’s the law so your friend and tow truck driver broke even more laws. Your friend also is required by law to report the accident so your friend doesn’t deserve to even be a driver or be allowed to be near a road.
Car and House Insurance are obligations here in France , i don’t know about the prices for the house but i agree with you that this is racket … go figure it out why i have to pay 1200€ a year for a 58hp Twingo ….. when i could insure a 150hp E34 520i for 1500€ a year … and the prices only go down after a year but only slightly …. I wish i could find a country without regulations on cars !
I’ve heard that Australia and New Zealand has loose regulations, although I’m not a 100% sure.
You could - in Bulgaria you can insure almost any car for about 100 Eur per year. Many people from other EU members insure their cars here.
If anyone has any questions about how this all works, and why it works like it it does, we are more than happy to try to help answer. We know a bit about it as we’ve just launched an insurance start-up that lets you get insured on a friends car for as little as an hour (in the UK).
CarThrottle Insurance company? come on guys lets just insure ourselves for a fair price, knowing that we will most likely we won’t dip into it unless for a bad wreck