Masterherald News

Drivers are in line for a £50 insurance bonus after ministers struck a deal to tackle fake whiplash claims.

Industry bosses are to pass on to hard-pressed motorists all the savings made as a result of measures to tackle crash-for-cash scams, it is revealed today.

The fraud clampdown promises to end the right to cash compensation for minor whiplash injuries and lift the upper limit for personal injury suits in small claims courts from £1,000 to £5,000.

James Dalton, of the Association of British Insurers, said: “The Government reforms are a significant breakthrough in tackling the UK’s compensation culture and are good news for motorists.”

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He said it would “help to bring down unnecessary costs in the motor insurance market and honest motorists should be the beneficiaries”.

Labour MP Graham Stringer, who sits on the Transport Select Committee, said: “We have done a number of inquiries into this and there is no doubt there have been scams between some lawyers, some insurance firms and some criminals that have led to higher premiums.”

The Labour Party/Press Association Images

The average annual motor insurance premium cost £747 in 2014.

Whiplash payouts cost £2billion a year and add £90 to the average policy. The Ministry of Justice wants to introduce the new anti-fraud measures “as soon as possible”.

AA spokesman Ian Crowder said: “Britain has become the whiplash capital of Europe, so the insurance industry welcomes this.”

Earlier this month, Cardiff crown court heard that a crash-for-cash fraud case had involved 28 separate claims and 57 vehicles, and had cost insurance firms £763,068.

Justice Minister Lord Faulks said: “Insurers back these much-needed reforms and have committed to handing over savings to motorists quickly.”

But George Osborne has already added to drivers’ insurance costs.

He raised insurance premium tax from 6% to 9.5% in July’s emergency Budget.

Linden Ellis was minding his own business when a van cut across him in Maidstone town centre. A common enough occurrence, but this time the van clipped his car.

Linden’s Vauxhall Vectra was was damaged as a result, and the van driver denied responsibility. The consequences? Linden was about to lose two years worth of no-claims bonus.

“This may have only been a fairly minor accident, but losing your no claims bonus unjustly can have a huge and unfair effect on premiums,” said Gerry Bucke, general manager of Adrian Flux Insurance Services.

How big an effect? Linden’s premiums were set to rise £750.

How £16 saved him a small fortune

Fortunately for him, Linden saw a TV programme last year that featured dashcams.

These cameras cost as little as £10 and can save you up to 12.5% on your insurance.

And even if you don’t get a discount, pretty much all insurers now accept footage from them, meaning if you’re in an accident that’s not your fault you have a better chance of proving it.

Which is exactly what happened to Linden.

“He said it was not his fault, and without the video evidence it was his word against mine so it would have been almost impossible to prove,” he said.

“The camera has been a godsend … It’s saved me hundreds of pounds.”

It’s the New Year hangover that just won’t go away. And as the post-Christmas credit card bills and bank statements start hitting the mat, it just gets worse.

But if you’re suffering at the moment, the one comfort is you’re not alone. More than a quarter of us are set to struggle this month as the expense of the festive season takes its toll.

Research from the Money Advice Service shows one in three people felt pressure to spend more than they could afford over Christmas.

And more than 13 million workers were paid early in December and will have to wait longer until payday this month

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.

Read more: The insurance small print that cost one motorist £45,000 – even though they WEREN’T DRIVING

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.”

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.

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.

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.

Read more: The mistake that means 5 MILLION motorists are risking £271 fine and a driving ban

How to ensure they say “yes”

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The first one is obvious: Make sure your insurance form is properly filled in and you know what is – and isn’t – covered.

With travel insurance, these are the medical conditions that people frequently fail to declare, remember that drinking on holiday comes with a BIG risk and your EHIC cardwon’t cover you for a lot of places and treatments abroad.

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.

And remember, if your claim is rejected and you think it’s unfair, you can always take your case to the Ombudsman.

So far this year, it’s upheld more than 1,500 complaints about from consumers about home insurers paying out.

If you’ve been affected by flooding, make sure you take pictures of the damage –we’ve got the full guidance here.