Government reforms also promise to lift the upper limit for personal injury suits in small claims courts from £1,000 to £5,000
Claims: Whiplash payouts add cost for all of us
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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Costly: Running a car in the UK
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
‘Scams’: Labour MP Stringer sits on Transport Select Committee
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.
Motor insurance
Average premium in 2014Amount added by whiplash payouts0100200300400500600700800£
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.
The accident wasn’t his fault, but this Kent motorist would have been on the line for an astonishing £750 increase in his car insurance if he hadn’t seen a TV show
How even cheap technology can save you hundreds
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.
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.”
Other ways to bring down your insurance costs
Dashcams aren’t the only technology that can save you serious money on your insurance.
Telematics can also bring down your premiums. This is a GPS box that monitors how, where and when you drive, and can send alerts out for bad or dangerous driving. Co-operative Insurance estimates adding a telematics box to your car saves young drivers £170 a year on their insurance.
There are also a string of ways to save when you renew whether you have any extra tech or not.
Oh, and while you are comparing, there are some tricks to getting cheaper insurance without reducing your cover level, we’ve rounded up 6 of the best here.
If you can keep your car in a garage or off the road the premium falls again.
Oh, and once you know where’s cheapest, check to see if there’s cashback available. By using a cashback service like TopCashback or Quidco rather than using the comparison site directly you could get up to £120 back.
More than a quarter of us are set to struggle as those post-Christmas credit card bills start pouring in – but you can make life easier as you pay it all back
Back in the black: You’ll love it when you’ve fixed those finances
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
On top of this, households are already feeling the pinch as bills keeps rising.
Control the cash: We’ve got some tips on slashing your spending
The latest BACS Bill Tracker from the people behind direct debits shows the cost of essentials including energy , mortgages and rent were up £85 in November compared to five years ago, to an average of £671 a month.
So to help you through this tough month and the year ahead, we’ve come up with 10 great ways to slash your spending and put more cash in your pocket.
We’ve got some easy money-saving ideas that will leave you hundreds of pounds better off in 2016.
Ditch the dud direct debits
Cancel those payments you don’t need, no matter how little they cost. Maybe you’re no longer getting value from your gym membership, dental plan, magazine subscriptions, club memberships and other non-essential payments that eat away at your income.
Remember: If you don’t use it, lose it. Every penny saved is a boost to your budget.
Cut your credit card interest costs
If you’ve got £2,000 spread across cards at an average interest rate of 19% APR, and are paying back 5% of the balance each month, it will take you almost nine years to clear the outstanding amount and cost you more than £835 in interest.
You’d be debt free in just over a year and a half simply by switching it to a 0% balance transfer card and paying off £100 per month – and all it would have cost you is the one-off balance transfer fee of less than £60.
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Take charge: Switch to a 0% balance transfer card
Consolidate debts
If you find it difficult to keep track of your credit card balances, your overdraft or repayments on store cards or car finance, maybe it’s time to consider combining all your borrowing into a single personal loan.
If you do this, you must destroy the cards and close accounts completely once you have paid off balances. The last thing you want is to have restructured your debt and then get back into bad habits by running up new debts on your plastic.
Repay that overdraft
If you’re constantly in the red , it’s time to clear the debt once and for all. If you’re £500 overdrawn for at least three weeks of every month, you could end up paying £20 per month in charges with some banks. That’s a hefty £240 over a year.
If you opt for the Everyday Plus credit card from MBNA, you can transfer some of your credit limit into your bank account to wipe out your overdraft.
With the interest rate at just 7.4% APR, if you pay £22.50 per month to the card instead of in overdraft charges, you’ll have wiped out your overdraft in just two years. The total interest would be just £39.
The cheapest banks for overdrafts are First Direct (first £250 interest free) and M&S Bank (first £100 interest free).
Plan: Get rid of your overdraft
Compare insurance quotes
The golden rule is to NEVER accept the renewal quote from your home or car insurance provider and to shop around every year to see if you can get the same cover cheaper.
It’s worth a call to your insurer as sometimes they will price match and save you the hassle of changing providers. We managed to find car insurance cover for £155 viagocompare.com instead of the £220 renewal quoted.
De-clutter
It can be a struggle to find a home for your new Christmas gifts , so why not have a clearout of all the stuff you no longer use and stick it on eBay or sell it locally on gumtree.
It’s a double winner as your house will be less cluttered and your bank account will look a bit healthier.
Clear the clutter: Sell your unwanted stuff
Homemade instead of shop bought
Carry a notebook with you for two weeks and write down everything you spend. You’ll be surprised how much cash you fritter away on coffees, sandwiches and that beer after work.
You can easily save upwards of £30 per month simply by making your own packed lunch a couple of days each week rather than shelling out for expensive shop-bought sandwiches.
If you’re a smoker and know you can’t give up altogether, try cutting back to two ciggies a day. In a year that will save you £250 – enough to pay the TV licence and have a bit left over.
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Plan ahead: Careful food shopping will save you cash
Smart food shopping
Rule 1: Don’t impulse buy at the corner shop. Instead, plan your food shopping and go to the supermarket just once each week.
Rule 2: For this to work you need to stick to your list and not be tempted by special deals that’ll end up sitting at the back of your cupboard for weeks. Don’t let sneaky supermarket marketing ploys ruin your cost saving plans.
Rule 3: Use the food you’ve got in the freezer. Lots of people use it as a store cupboard and end up forgetting what they’ve got buried away in there. In a recent trial, Mirror readers saved from £15 to £30 a week by doing this – and they didn’t end up throwing half as much food in the bin.
Fill up the car for less
Check out petrolprices.com to find the cheapest petrol garage near you. Even though fuel costs are falling fast, it still helps if you can save an extra 2p or 3p per litre.
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Shop around: Look online for the cheapest petrol station
Be more energy-efficient
Help keep those bills down. Don’t leave lights on in unused rooms or appliances on standby. This could save you £50 to £90 a year.
Try turning your thermostat down a notch or two. Every degree you lower the temperature can help save £50 or more per year.
If your heating is on a timer, then set it to come on 10 minutes later and go off 10 minutes earlier – that way you’ll save 30 hours of energy costs in three months.
Consider buying a radiator booster. For a cost of less than £30, it drives extra heat into your room and could help you shave up to 5% off your annual energy bill.
Many firms assure people they have found the best price for them or bury rises in small print – and give little or no explanation.
Millions fail to challenge quotes but the Sunday People found customers could save up to £266 a year on car and home cover by shopping around.
Dan Plant of moneysupermarket.com said: “Auto-renewal reduces competition and ultimately costs consumers big money.”
Mother-of-three Vickie Dunn was stunned when Tesco said her car insurancewas going up £200 – then furious when she saw the same policy being offered to new customers online for £183 less.
Shock: Vickie Dunn couldn’t believe it when Tesco added £200 to her car insurance bill
“I was gobsmacked,” she said. “I expect a discount for being loyal, not a fight to get the same price offered to everybody else.”
Experts say prices offered to existing customers are typically 10 to 20 per cent higher than those for new clients.
Our research – done alongside gocompare.com – found nearly one in five of the UK’s 32 million drivers renews their cover automatically. This means motorists could be being ripped off by as much as £1.2bn a year.
And adding on home, travel, breakdown and pet insurance would add hundreds of millions.
Gocompare calculates 5.8 million drivers are being overcharged an average £208 and some 4.25 million home policy customers pay £58 over the odds.
Shop around: Gordon Polding saved £150 by switching home insurance
Gordon Polding saved £156 on home insurance after M&S said his premium would be £240 and he found a deal with the AA for £84.
The 63-year-old, from Coventry, said: “I got a quote on gocompare and asked if they’d match it. I’d been with them years but they wouldn’t budge. It clearly does pay to shop around. They take the mickey.”
Regulators say customers should be able to see the previous year’s cost when they get renewal documents. But the proposed changes, open to consultation until March, will not come into force until next year at the earliest.
Of Britain’s biggest firms, only Axa puts last year’s premium next to the price on renewal letters. Many claim publishing the previous price would be confusing.
The Association of British Insurers says it is working with the Financial Conduct Authority on a fair way to show the previous year’s price to customers.
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.
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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.
