Playing the insurance claım game

Don’t give insurance companies any excuse to raise your premiums, says Paul Lewis

Mature couple with papers and laptop on kitchen table at home

Insurance is a game of chance. The insurer bets you will claim less than you pay in premiums; you bet the other way. Usually of course, the insurer wins – partly because it has years of experience, but also because it accumulates information about you and others. It’s never sensible to call your insurer about any incident
unless you’re actually making a claim. That call is treated as data, and if it seems to the actuaries to increase the likelihood of your making a claim in future then your
premium will be boosted next year.

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Take car insurance. When you take it out you agree to pay a certain amount of any claim, called the excess. That means it’s not worth claiming if the cost is low. There is also a no-claims bonus, which can reduce your premiums by up to 60% if you do not claim for a number of years. And you can pay to protect that bonus so you don’t lose it if you make the odd claim.

If you do have a slight accident, the temptation is to ask the insurer if it’s worth claiming and whether that will affect your no-claims bonus. That call is a big mistake. By even asking the question you are telling the insurer that your vehicle has been involved in an incident.  The actuaries will conclude that you are a bigger risk than they realised, so your premium will be increased next time. Never mind that it was completely and utterly not your fault, or that your car was hit by someone else in a marked bay in a car park. Your car has been damaged, so is statistically more likely to be damaged again.

Changing your insurer won’t help, either. They all upload information about motor and home insurance to the Claims and Underwriting Exchange (CUE). Any incident that may or may not lead to a claim is logged. So they all know about your call, and the new firm’s actuaries will also add that percentage because you are a risky – or unlucky; they don’t care! – driver.

Paul Lewis presents Money Box on Radio 4

Send any questions to Paul.Lewis@radiotimes.com Paul cannot answer you personally, but I will reflect them in his column in Radio Times magazine.

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