Car insurance claims

Economy with the truth costs drivers dearly

9 March 2009

30 per cent increase in claims refused after policyholders failed to disclose key facts

AA Insurance is warning drivers to beware of seeking to economise on car insurance premiums by failing to come clean on details such as previous claims or convictions.

The number of claims refused by insurers due to people giving incorrect or false details when they take out insurance has soared by nearly a third in the last six months, according to AA Insurance.

It estimates that fraud now adds around £30 to every private car insurance policy in the UK, with honest customers effectively subsidising fraudsters by this amount.

Top reasons for the upsurge in refused claims

  • undisclosed convictions
  • "fronting", where people try to cut premiums by misleading insurers over who is the main driver (especially where a young or inexperienced person is the main driver)
  • failing to tell insurers about previous claims
  • failing to tell insurers about modifications made to the car that could affect its safety or value
  • providing a false address where the car is kept

AA comment

Simon Douglas, Director of AA Car Insurance, says people should not be "economical with the truth" in an effort to cut their premiums when shopping around for cover.

"Over the past six months we have seen a huge upsurge of cases where insurers have cancelled cover because customers haven't informed them of important facts.

"Not telling the whole truth amounts to fraud and can result in your cover being voided, possible prosecution and potentially thousands of pounds in costs, especially if there are injuries involved.

"On top of that, you will find it difficult to find cover in the future. The one or two insurers that do offer cover for 'tainted' customers charge an extremely high premium.

"Insurers will investigate if there is reason to doubt information that customers provide. By bending the truth to try and save a bit of money on your premiums you could end up losing a fortune."

Case Studies


A man took out insurance on a car he claimed was his own, but which in fact belonged to his son and his son was the main driver. This meant the premiums were lower than if the son took out insurance in his own name.

The son had an accident, rendering the car a write off. However, when he made a claim the insurer discovered the "fronting" fraud. It declared the policy void and refused to deal with the claim, leaving the owner with no compensation for the loss of his car.

Also, as another car was involved in the accident, the insurer still had to deal with the third party's claim. Therefore the policyholder still has to pay the full premium.

And, depending on the third party claim costs, the insurer may approach the policyholder to recover some of these costs.

The man will now have to tell any future insurers that he has had a policy declared void – meaning many will not provide cover, and any that do may charge a much higher premium.

Total cost to policyholder: over £12,000 (plus possible third-party costs and higher future premiums).

Non-disclosure of modifications

A driver took out insurance declaring there were no modifications to his vehicle and later was involved in an accident.

The accident was not his fault, but when he reported it to his insurer, it was discovered that the car had extensive modifications including alloy wheels, sports exhaust, air filter induction kit, and suspension brace kit. The engine was modified and the bonnet had hinges fitted so it was raised at the rear.

All these changes meant his Citroen Saxo Furio 1400cc car had been transformed from its original spec to a high performance sports car. If the insurers had known this when the policy was first taken out they would not have offered cover.

They therefore declared the policy void and refused to deal with the claim.

Even though the accident was not his fault, the driver was left with the full cost of repairs to his car, including damage to the expensive enhancements.

As with the previous example, the policyholder must tell any future insurers that he has had a policy declared void – meaning possible refusal of cover or much higher premiums.

Total cost to policyholder: £5,000 (plus higher future premiums)

Join the discussion in the AA zone


20 March 2009