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Mistakes that could invalidate your car insurance

Thursday, June 06, 2019

Car insurance is simple right? You pay the insurer a premium every month and should you ever be involved in an accident, you contact them to have your vehicle repaired or replaced. Having car insurance can save you a lot of money and stress in the event of vehicle damage or third -party injuries, however, just because you’ve been paying your premiums consistently, doesn’t always mean you will be approved when it’s time to claim. On the whole, car insurance companies pay out claims without fuss, but there are a number of factors that can make a difference between acceptance and rejection. 

Incorrect details

It might be tempting to bend the truth of your situation a little to give yourself a better chance in your claim, but misrepresenting crucial information can sabotage its approval. The guidelines from car insurance companies are there for a reason. Some locations, for example, have higher crime and theft rates, which influences your risk profile. So, if you regularly park your car at your parents’ house while you’re at university, and listed the latter address on your policy, you could end up with a rejected claim if your car gets broken into at your parents’ home.

Keeping quiet about alterations

Whether you customise your car for aesthetic reasons or improved performance, it’s best to be open about these changes. Giving your car a makeover means it will be costlier to repair so your insurer needs to adjust your premium in order to cover the cost. If you don’t inform your insurer about these modifications, you will be rejected if you need to make a claim. 

Noting the incorrect person as the regular driver

Since the regular driver matters to insurance companies, it pays to indicate the correct person who is behind the wheel the most. If you’re going to let family members drive your car, be sure to let your insurer know. Some policies only pay for repairs if the main policy member was in the driver’s seat at the time of the accident. Others will still cover you if you weren’t in the car provided that you’ve indicated the correct main driver. 

Insurance fronting

The premium of each insurance policy is based on risk, which in turn, indicates how likely the policyholder will make a claim. As such, the premium of young, inexperienced drivers tend to be more expensive than their parents. Being aware of this, parents may try to lower the cost of insurance by claiming they are the regular driver of a car that they’ve bought for their teenager. This is called “fronting.” But for the fact that it could lead to the invalidation of the policy, fronting could also result in insurance fraud charges.

As these scenarios show, if your car is covered under an insurance policy, it would be in your best interest to avoid taking actions that will hinder you from receiving a payout when you claim. Remember, that any bad faith practices may be recorded on your claims history, which can impact your next claim or application negatively.