The way car insurers calculate your premiums can be infuriating.
Many drivers will have seen their premium soar for no reason other than the way they filled in the form or some obscure factor in their personal circumstances – often beyond their control.
This is mainly down to the way insurers calculate risk. Computer algorithms will determine the likelihood of you making a claim based purely on the information you provide. This can lead to absurd situations such as the case of a woman deemed a more risky proposition because her car was crashed into and written off while it was parked.
James Daley, of Fairer Finance, a rating service, said a full review of insurance pricing was “long overdue”. He added: “As insurers compete to find the very best risks, we’re creating an insurance underclass comprising certain minorities who fall outside the industry’s statistical norms.
“When insurance first existed it was about pooling risk. Everyone put the same amount of money into the pot and those who needed it would get paid. Today the price is tailored to the risk, which means those who need it most may not be able to afford it.”
Here Telegraph Money details five unusual reasons your car insurance premium might increase.
You’ve been in an accident that wasn’t your fault
One of the most common reasons for a premium rise – and the one that annoys customers the most, according to Mr Daley – is if you’ve made a “no-fault” claim.
If a driver pulls out in front of you at a junction and causes a crash, insurance companies will accept that it was not your fault. But they may still inflate your premium when you come to renew as, statistically, you are more likely to be in another crash.
Mr Daley said: “It may be statistically true that drivers who have been involved in an accident are more likely to be involved in another – even when it wasn’t their fault – but it’s simply not a fair policy to charge people more in those circumstances.
“If someone jumps a light and smashes into you, there’s no good reason why you should have to pay more for your insurance as a result. This kind of data-driven unfair pricing is what gives insurers such a bad name.”
One reader, Mary Mangan, 53, found herself in a Kafkaesque bind with her insurance company when her car was written off while she wasn’t even in it.
Her car was parked on the road outside her home when a van driver lost control and hit her car and her neighbour’s, writing them off. When she came to renew, her premium had increased by more than £100.
She said: “I’d understand it if I was driving, but how can that be the case if I wasn’t even in the car?”
You’ve moved to a newly built home
Another factor that insurers will use when determining your premium is your address. If you’re unlucky enough to live in a car-theft hotspot you will, unfortunately, end up paying more for your insurance.
However, moving to a newly built house could also cost you because it may not appear on the insurer’s database. This could mean you end up paying over the odds.
Doug Welch is one such driver. After moving to a newly built house in Northamptonshire he was shocked to find that the renewal premium quoted by Saga, his insurer, was £1,117 – almost treble the £464 he previously paid.