Is your insurer being unfair?

UK motorists could be paying £225 million too much for their car insurance. We show how you can cut the cost of your premiums.
According to the Office of Fair Trading (OFT), insurers are competing with each other unfairly, which means motorists are paying way more than they should be for cover.
The government department has now asked the independent Competition Commission to investigate these claims.
Competition
Let’s say you and another driver are involved in a car accident, but it’s the fault of the other driver.
The other driver’s car insurance company will cover the cost of damage to your vehicle, but it doesn’t have any say in who carries out the repairs.
Your insurer will sort out who repairs your vehicle, and may opt for a really expensive mechanic, just because it’ll make a huge dent in the pocket of their competitor – the other driver’s insurer.
It may also decide to get other third parties involved, such as courtesy car providers, so then rebates and referral fees have to be paid by the other driver’s insurer as well.
‘We believe the focus that insurers have on gaining the competitive edge through raising their rivals' costs means that drivers pay more than they need to for their motor insurance policies,’ explained John Fingleton, Chief Executive of the OFT.
The Competition Commission will take a closer look and, if it’s findings support those of the OFT, legislation may be introduced to reduce unfair competition.
Whiplash
Earlier in the year, a report from the Transport Select Committee blamed the recent increase in claims for whiplash injury for the spike in the price of car insurance.
The report shows that the number of people injured in UK road accidents decreased by 62,369 from 2005 to 2010.
However, the number of motor insurance injury claims recorded by the Compensation Recovery Unit increased by a massive 324,902 in the same period.
In light of this evidence, the Transport Select Committee urged the government to crack down on insurance companies and their links to injury lawyers.
Cut your costs
Until the car insurance industry is more closely regulated, there are actions you can take to try and reduce your premiums.
Shop around: first of all, if you’re looking for a new car insurance policy, use a comparison website so you can see which insurer offers a deal that suits your needs for the cheapest price.

Opt out of added extras: you can choose to opt out of certain extras such as breakdown or windscreen cover, but before you do, consider whether you need them.
Fit an alarm: improving the security of your car should make it less likely to be stolen and, therefore, may be less expensive to insure.
Pay annually: it’s usually cheaper to pay for your insurance in one lump sum, rather than in monthly instalments.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**

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