Wednesday, June 6, 2012

It's official. Car insurance is a rip off

AN MP and Life On Cars reader described excessive industry charges for car insurance as ‘dispicable and absolutely criminal'.

Southport MP John Pugh said he was calling for residents who'd been hit hard by excessively quotes and premiums to get in touch with him after he was shocked by the findings of a survey by the Office of Fair Trading found that insurers and garages were working to drive up prices and that the cost of getting cover had gone up in some cases by as much as 40%.

Mr Pugh said this week: “This sort of behaviour is despicable at the best of times, but in a recession when people are struggling to make ends meet, it’s absolutely criminal. "I've heard tales of courtesy cars being provided for a man who broke both legs in an accident and people who have been out of the country on holiday because it pays insurers to do a deal on with hire firms. There is clearly something rotten in the state of the car insurance market. The ordinary motorist is picking up the tab and it is about time action was taken.

"I would therefore like to ask Southport residents to send me their car insurance ”horror stories“ to submit as evidence to the Competition Commission. This is a great opportunity to clean up the car insurance market, and the more damning the weight of evidence the better."

Mr Pugh also cited the example of one of his constituents being charged £26,000 to insure a secondhand Citroen Saxo, despite the car itself being worth £1,000. The commission, led by Merseyside MP Louise Ellman, said that following the results of the OFT investigation that she was now looking forward to the Competition Commission working to reform the car insurance industry, and said evidence suggested that insurers, claims management firms, solicitors were exploiting motorists and inflating premiums.

"We found evidence to support the view that various features of the private motor insurance market prevent, restrict or distort adequate competition in ways that do not deliver a fair deal to motorists. The OFT’s provisional decision to refer the highly dysfunctional UK market in private motor insurance and related goods or services to the Competition Commission for full investigation is a major step forward.

"Like the OFT, we found evidence to support the view that various features of the private motor insurance market prevent, restrict or distort adequate competition in ways that do not deliver a fair deal to motorists. I will propose to the Transport Committee that we participate in the consultation announced today to make the strongest possible case for the referral. I now expect car insurers and the other firms involved to co-operate fully with all stages of this process."

If you live in the Southport area, MP John Pugh would like to hear your car insurance horror stories. Share them with us by sending an email to or leave a comment below, and we'll pass on any correspondence to John Pugh MP. Please include your contact details.

A FEW tips on how to avoid getting stung by excessive car insurance quotes:

 • Shop around and don't go for the first quote you find. With plenty of price comparision websites offering quotes from a wide variety of insurers, you can avoid paying over the odds.

 • Sharpen up your skills. Motoring organisations like the Institute of Advanced Motorists often offer their own insurance schemes for those who pass safer driving courses, meaning you'll not only be less likely to have an accident but quids in too.

 • Swallow your pride and avoid sporty, high-powered cars if you're keen to save on insurance costs. In the 1980s there was a long-running joke that GTI stood for Guaranteed Theft Item, but it had its basis in truth. Lots of people like hot hatches, sports cars and off-roaders... including car thieves.

 • Consider whether you really need to claim. If your car's only lightly damaged, there's a chance the rise in your premium if you claim will actually be more than the cost of getting it repaired at your expense.

 • Tell your insurer too much rather than too little - they're often able to offer you discounts on things by offering you specialised policies, such as if you own more than one car. Oh, and don't lie - insurers will often refuse to stump up if they find any discrepancies.

 • If you're smitten with an older model consider a classic car policy, which have more stringent limits on mileage but can save you money compared to more conventional insurance.

 • Don't insure it in your sister's or your girlfriend's name. Not only is this technically fraud but the savings women have been getting over men are set to outlawed later this year anyway, after an EU judge argued that female quotes being cheaper than male ones was a form of gender discrimination.

 • Don't pay monthly unless you have to. It might seem more manageable but in most cases it'll actually cost you more, so you might as well stump up and pay it off it one go.

 • Be alarmed - not with the cost of car insurance, but in terms of how secure your motor is. Fitting a device like a Tracker or beefing up your car security might be pricey, but often insurers will offer you cheaper insurance as a result.

 • Don't be a journalist. Reporters, and other professions like estate agents, sales reps, and entertainers are all considered more likely to claim, and have to pay more as a result.

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