DODGY CLAIMS INCREASE COST OF CAR POLICIES

ABOVE: Watch out for the increasing cost of motor policies

23rd October 2009

THE cost of motor policies is increasing as insurers look to recoup money lost through fraudulent claims by raising excess charges.

The warning has come from price comparison service Uswitch on the back of new findings from the Association of British Insurers, which show the industry has just footed a £1.9 billion fraud bill. Reports also suggest a 44 per cent increase in false claims.

According to Uswitch, insurers have increased compulsory excess charges, which are added to any voluntary excess customers agree to, by almost a third in the last year to claw back lost revenue.

This means that in the event of an accident, drivers will now have to pay their insurer an average of £170 before any voluntary excess is deducted, an increase of £41 on last year.

With one in five drivers claiming on their car insurance each year, providers will make £154 million more from excess increases in the next 12 months.

“Hiking hidden charges and exploiting consumers who don’t have the time or the inclination to scrutinise the small print is really sneaky in such a tense economic climate,” said Mark Monteiro from Uswitch. “Most people don’t even know they could be hit with two excess charges in the event of an accident.”

He adds that while most consumers are familiar with voluntary excess, a compulsory tariff can often “slip under the radar” when selecting a new policy.