An average comprehensive annual policy cost £625.70 in the final quarter of 2015 – up by £105.64 or 20% compared with the last three months of 2014
The typical cost of car insurance cover has leapt by more than £100 in the space of a year, an index has found.
An average comprehensive annual policy for someone who shops around across the market cost £625.70 in the final quarter of 2015 – up by £105.64 or 20% compared with the last three months of 2014 – according to the AA’s British Insurance Premium Index.
The typical cost of comprehensive cover increased by £59 or 10% compared with the third quarter of 2015, the AA said.
The 10% quarterly jump is the biggest seen since 2010, it said.
The AA said the rising cost of motor insurance is partly due to a tax hike imposed in November 2015.
More expensive: The cost of car insurance has rocketed by £100 in just one year
The standard rate of Insurance Premium Tax (IPT) – the tax paid each time an insurance policy is purchased in the UK – increased from 6% to 9.5% from November 1 2015, as announced in the summer Budget.
The change affects 7.3 million car policies.
Michael Lloyd, director of AA Insurance, said that personal injury claims – particularly those for whiplash – are also continuing to “haunt” the industry.
It is estimated that false and exaggerated claims add around £50 to every policy.
Research by AA Insurance last year suggested that 11% of drivers thought it was acceptable to make an insurance claim for an injury following a collision, even if no injury was suffered.
Mr Lloyd said: “It’s this acceptance that it’s OK to defraud insurers that has become endemic.
“It is stealing and it affects the premiums paid by your friends, your family and your colleagues – those that most wouldn’t dream of defrauding.”
Mr Lloyd said he expects premiums to continue to rise though 2016 “but not at the exceptional rate recorded over the last quarter of 2015”.
He continued: “And the sooner new legislation to tackle whiplash claims becomes enshrined in law, the sooner that will be reflected in the premiums quoted for car insurance.”
For the first time we can see not only how many people get told “no” when they claim on their insurance, but why they’ve been rejected too. This is how to ensure you DO get paid
Hundreds of thousands of people have been told “no” despite having insurance in place – this is why
Consumers have been denied more than a billion pounds in insurance payouts, new figures reveal.
In 2013 and 2014 some 525,000 people claimed on their home, car and travel insurance, only to be told “no” by their providers.
In that period, it was home insurance that was rejected the most often – with 378,000 claims denied. Travel insurance claims were denied 104,000 times while car insurance claims were denied 43,000 times.
“As insurers, we want our customers to have greater trust in us to pay claims when life gets difficult. We cannot earn that trust without being more transparent about how many claims are paid and why a minority of claims are usually declined,” said Huw Evans, the director general of the Association of British Insurers.
Average insurance payouts
£2,160
Car insurance
£2,520
Home insurance
£884
Travel insurance
Source: ABI, data from 2013-2014
Why insurers say “no”
The ABI didn’t just tell us how many people’s claims were rejected, it also explained why.
Home insurance claims were turned down most often because they didn’t think customers were looking after their home properly. Or “wear and tear or damage caused by a lack of maintenance”.
Claims were also rejected for being below the minimum threshold to pay out and not having accidental damage cover in the first place (it’s an optional extra).
“The burden of keeping a home in good knick lies solely with the policy holder and not doing it can have devastating ramifications if the worst happens. If maintenance work is done on the home, you must then inform your insurer of the changes made as that could provide insurers a reason to reject your claim,” said Simon McCulloch, head of insurance at comparethemarket.com
In the case of travel insurance, claims were most often rejected because trips were cancelled too late, people not being able to prove something was lost, not telling insurers about pre-existing medical conditions and – again – because claims were too small to trigger the insurance.
Number of insurance claims
4.3m
Car insurance
1.8m
Home insurance
800,000
Travel insurance
Source: ABI, data from 2013-2014
With car insurance, the picture is better. Some 99% of the 4.3 million claims made in that period were paid out on.
When claims were rejected AXA – which also published its own claims figures – found the most common reasons for a claim being rejected were for people not locking their cars, people driving under the influence of alcohol or booze or when cars were lent to someone else.
“Although the vast majority of claims are paid, there is still work to be done in making it absolutely clear to our customers, not just what their policy covers, but also what it does not cover and we will continue to look for new ways to do that,” said AXA UK chief executive Paul Evans.
When it comes to maintaining your home to stop insurers rejecting your payout, AXA offers the following tips:
Make sure your property is in a good state of repair and that any necessary maintenance work is carried out as required.
Slipped roof tiles and loose cement around chimneys can lead to water damage when the weather turns bad. Fixing these in advance would avoid you needing to make a claim in the first place.
Flat felt roofs have a relatively short lifespan. Typically, we would not pay for repairs if water is leaking through as a result of its age or condition.
Make sure you regularly clear your guttering. This will help ensure that rainwater does not enter your home and cause damp or water damage.
If your home has damage to its rendering, or its pointing is in a poor condition, get this repaired as soon as possible. This could leave you vulnerable to water and storm damage, and you may not be covered if you claim.
The Association of British Insurers (ABI) has published payout rates for the most common insurance claims made during 2013 and 2014
Home insurance: More likely to be turned down than car insurance claims
Around one in every five home insurance claims made by consumers is turned down – while just one in every 100 motor insurance claims is unsuccessful, new industry figures reveal.
The Association of British Insurers (ABI) has published payout rates for the most common insurance claims made during 2013 and 2014, in moves to help improve transparency and build customer trust.
Around four in five (79%) policyholders who made a claim under their home insurance were successful and received a payout, with the average figure being £2,520.
Meanwhile, nearly nine in 10 (87%) of travel insurance claims were paid out, with the average payout put at £884.
Getty
Problems: Insurers are much less likely to pay out
The analysis covers 6.9 million claims handled by 19 insurers.
It marks the first time the ABI has released data in this way, showing the success rates when customers have made a claim under motor, home and travel insurance – the three most popular types of general insurance held by UK households.
The figures were compiled to help customers understand more about what they are covered for – and why a claim might be turned down.
Common reasons for home insurance claims failing include claims being made for normal wear and tear or for damage caused by a lack of maintenance which was not insurable; the value of the claim being less than the policy excess; or that the customer had not bought the right kind of cover, the ABI said.
An example of not having the right kind of cover would be someone not having accidental damage cover, which is often an added extra.
With travel insurance , claims were often turned down because the policyholder had a lack of evidence to back up claims for items which had been lost, or because they failed to tell their insurer about a pre-existing medical condition.
Travel insurance: Claims are often turned down because of a lack of evidence
In other cases, the travel insurance claim came to less than the policy excess or a claim was made for a holiday cancellation which fell out of the scope of the cover.
Explaining the particularly high success rate for motor insurance claims, a spokesman for the ABI said that motor insurance products tend to be quite similar in what they cover, whereas with home insurance, for example, people could be covered for a wide variety of events.
There is also a diverse range of “add ons” such as legal expenses cover or emergency assistance for a boiler breaking down which can be bought with home insurance.
Huw Evans, ABI’s director general, said: “As insurers, we want our customers to have greater trust in us to pay claims when life gets difficult.
“We cannot earn that trust without being more transparent about how many claims are paid and why a minority of claims are usually declined.”
He continued: “Contrary to popular belief, insurers want to pay honest claims.
“It helps nobody when customers have bought the wrong product or have not disclosed important information.”
Mr Evans said the figures will be used to drive consumer awareness and further improve the acceptance rates for home and travel insurance claims.
