From the maps in your sat nav to the efficiency of your engine, software increasingly plays a role in how your car operates. But could updating your software increase your car insurance premium?
In July, Which? member, Chris Yearsley, told his insurer LV that his Tesla Model 3 had received a routine update.
The ‘over the air’ (OTA) update added a few minor bug fixes and Polish as a language option. But LV viewed the update as a modification to the Tesla and raised the premium by £95.
Last year, Chris’ car received 17 such updates.
Chris’s challenge led to LV reinstating his old premium and providing a discount as well as compensation. It also prompted LV to change its rules, meaning current and future customers won’t have to report routine updates.
Chris’ case matters not just to Tesla owners or to LV’s customers. We’re concerned that owners of other cars with software updates could find themselves hit by price rises – or risk invalidating their cover altogether.
Insurers silent on software updates
It’s not unusual for insurers to require you to report modifications to your vehicle, but the status of software updates is less clear.
LV told us: ‘We now recognise that it isn’t fair to expect customers to contact us for every update, so as a result of this valid challenge we are changing our approach.
‘Customers will no longer need to let us know about [routine] OTA updates from Tesla.
‘We will also be proactively contacting the 12 customers who have contacted us in the past year to notify us of an update and arranging rebates for any who were charged.’
While LV had to U-turn on its software updates policy, at least it had one.
When we examined 32 insurers’ T&Cs, LV was the only insurer to explicitly mention software updates in its documentation.
This is despite ‘connected cars’ becoming more common, helping drivers but also giving criminals new opportunities, as we revealed earlier this year.
- Find out more: our expert pick of the best cars, based on lab controlled tests and real-world driving
Standard vs performance enhancing updates
We approached seven major insurance firms, to ask whether their customers needed to report software updates.
Admiral and Esure told us they don’t require drivers to report them. Esure remarked that it’s an evolving area that it’s monitoring carefully, while Admiral emphasised that it’s important you download manufacturer updates, which could be important to the car’s security.
Direct Line requires drivers to report paid updates, but not free ones.
Hastings Direct pointed to any changes in the car’s brake horsepower or torque (pulling power). At least one manufacturer – Tesla – sells software add-ons that boost the engine’s power.
A spokesperson for the British Insurance Brokers’ Association (BIBA), Graeme Trudgill, told us he would ‘expect an insurer to want to know’ about performance upgrades.
But he warned that, when it comes to software, ‘we are entering a new world of motoring and motor insurance’ with grey areas that may only be settled in court.
BIBA has previously warned the government about possible scenarios where insurers could avoid paying claims if customers had failed to download routine software updates related to the car’s safety.
When should I contact my insurer?
None of the insurers we spoke to required policyholders to report all updates, but it’s worth checking your terms and conditions.
Generally speaking, updates that add to your vehicle’s power, acceleration, top speed or handling are more likely to be considered modifications.
Modifications, which could include anything from lowering a car’s suspension to adding go-faster stripes, may affect how likely the insurer thinks your car is to be damaged or stolen, or how expensive it would be to repair – and so can have a knock-on effect on your premium.
Updating your insurance after buying it, to reflect a modification, may additionally incur a policy adjustment fee.
If your insurer has specific expectations of you, these should be clearly communicated.
Our car insurance reviews
When assessing insurers, we look at 73 elements of their car insurance policy.
That includes the fees you may have to pay if you need to adjust your cover.
We also factor in customer feedback when picking our Which? Recommended Providers.
How can I challenge my insurer?
Insurers have to treat their customers fairly. So if you feel your insurer isn’t, complain (read more about how here).
Once you complain, the insurer has eight weeks to resolve the matter.
If they fail to do so – or you remain dissatisfied with the outcome – you then have the option to escalate your complaint to the Financial Ombudsman Service.
Find out more: Complaining to the Financial Ombudsman Service