Dubious car insurance claim payouts contributing to higher premiums for some honest motorists, Which? warns
Car insurance firms paying out for dubious claims is leading to some honest motorists seeing their premiums increase, Which? has warned.
The consumer champion surveyed more than 100 of its members who claimed they have been the victims of insurance fraud within the last five years. One in 10 believed they had been falsely implicated in a claim.
Opportunistic insurance fraud, when somebody spots a chance in their everyday life to exaggerate a claim for financial gain, or provide false information when applying for insurance, appears to be on the rise.
The Insurance Fraud Enforcement Department of the City of London Police, reported that numbers of ‘opportunistic’ insurance fraud cases have increased by 61% since last year.
The impact of claims going on honest motorists’ records could lead to higher premiums for those affected when the time comes for renewal, as well as for all motorists as insurers look to recoup the cost of claims. This will only heap further cost pressures onto consumers at a time when car insurance premiums are at record highs, according to data from the Association of British Insurers.
The increase in cases of opportunistic fraud has been linked to the cost of living crisis. A survey carried out in June by the Insurance Fraud Bureau – the insurance industry’s fraud watchdog – found that one in 10 people said they would consider making a fraudulent insurance application or claim if they were struggling financially.
While ‘crash for cash’ attempts have happened for some time, new variations are emerging, including ‘wing mirror scams’, where fraudsters throw an object at a passing car to make an impact sound, then pursue the driver claiming they have clipped their wing mirror (which was already damaged) – demanding cash on the scene, or initiating a claim.
One Which? member, an Admiral customer, was notified that his Volkswagen Caddy had hit another car some weeks earlier. After the third party supplied photos showing the Caddy parked on a street with its front bumper in contact with the other car’s damaged rear, Admiral paid out the £1,100 claim after a 16-month exchange.
Admiral’s lawyers explained that the images would probably sway a judge in favour of the claimant should the matter go to court. However, there were several reasons to doubt the evidence: the pictures did not show if a collision actually occurred and an independent engineer’s report, commissioned by Admiral, concluded that the claimant’s damage was not consistent with contact with the Caddy.
The Which? member told the consumer champion and Admiral that he had been named on the court claim form even though he had not been present at the time of the incident. He explained that his daughter had been using the car that day - although neither she nor her passenger were mentioned in the court claim form.
Admiral told Which? it was ‘genuinely sorry’ that the motorist was unhappy, explaining it was ‘not in our interest to just settle a claim that is possibly fraudulent’ and they will ‘challenge’ decisions where possible. It added that ‘fraud is a serious allegation and difficult to prove’, with courts ‘not quick to make such findings which can lead to criminal investigations, contempt of court proceedings and ultimately fines or imprisonment.’
Another Which? member, Lorraine Davies, was accused of scraping the passenger-side door of a silver Lexus, but denies encountering it at all in the ‘almost empty’ car park. Lorraine did see another car - a white BMW - which had damage on its driver’s side - and parked elsewhere in the car park so as not to be falsely accused. She is emphatic that she did not cause the damage to either car.
Her insurer, Tesco Bank, initially disputed the claim against her, asking the claimant’s insurer LV for more evidence and assigning an engineer to inspect Lorraine’s car. The report found a few scrapes on her 10-year-old Ford and some damage on its left wing was ‘approximately the same height’ as that sustained by the claimant’s Lexus. LV also found a witness – an employee in a nearby shop who had viewed CCTV footage of the incident and wrote that Lorraine’s car had damaged the Lexus.
However, the evidence was far from overwhelming and the witness’ statement was collected two months after the incident, by which time the CCTV footage had been lost.
Lorraine is adamant she was not involved in a collision, and was disappointed to learn that Tesco had settled on her behalf, paying £1,214, without informing her first. The fault claim may affect her premiums for up to five years.
Tesco has acknowledged that ‘more detailed investigations and communications during the claims process could have taken place’, though asserts that ‘these wouldn’t have changed the outcome.’ LV said of the case that it takes insurance fraud very seriously and obtains as much evidence as possible.
The consumer champion believes insurers need to do a better job when investigating claims to make sure customers are not having incidents put on their record wrongly, which could lead to higher premiums.
Jenny Ross, Editor of Which? Money, said:
“Going through an insurance claims process is never the most enjoyable experience, but it’s even worse if you’re being wrongly accused of causing damage to another car.
“Good insurers will make you feel like they’re on your side, leaving no stone unturned in the pursuit of the truth. Unfortunately, that doesn’t appear to have happened to some customers who now face higher premiums at a time when they are already at record levels.
“Insurers need to do a much more thorough job of investigating claims with dubious evidence.”
-ENDS-
Notes to Editors
Which? surveyed 111 of its members who had reported being affected by insurance fraud in the past five years.
Lorraine Davies is available for interviews via the Which? Press Office.
Motorists unhappy with their current provider should consider switching providers. Which? has several online guides which continue to find large gaps in quality between firms when it comes to offering good quality customer service.
Which? - Best and worst car insurance companies
How to protect yourself against false accusations
When you buy a policy, you surrender to the insurer the right to act on your behalf. But in the face of an ambiguous allegation, any evidence you can offer the insurer could influence how far it will go to bat for you.
Impartial witness accounts can be incredibly valuable – whether to confirm what happened in an accident or your whereabouts if you weren’t there. Photographic or video evidence is also very powerful.
A recent Which? car insurance survey found that over a quarter (27%) of claimants said dashcam evidence played a role in confirming details of events in their claim. Importantly, if you think your insurer has missed something relevant, let it know.
Claims handlers can make mistakes. If you think your claim has been mishandled, make a complaint and, if needed, raise it further with the Financial Ombudsman Service. These steps aren’t guaranteed to get you the outcome you want, but they are at least a way of having your claim re-evaluated
About Which?
Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation, we’re not for profit and all for making consumers more powerful.
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