Car insurance customers ‘penalised unfairly’ as many firms refuse lockdown refunds
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Car insurance policyholders have continued to pay the same premiums despite not using their cars as much as they have paid to. Experts warn that drivers have been “overpaying” for cover during a period of financial uncertainty for many.
James Blackham, co-founder of insurance experts By Miles, has warned that a new system was needed to “protect drivers” from being caught out.
They have appealed for insurance firms to pass over savings to motorists and that current returns policies were “not enough”.
Mr Blackham said: “During the first national lockdown driving levels dropped suddenly and dramatically, and so insurance claims followed suit.
“This saved car insurance companies over £1 billion in claims payouts.
“Despite this, motorists have continued to pay the same insurance premiums, even though they’ve clearly not been using their vehicles as much as when they first took out their policies.
“We want to see over £1 billion in claims savings that insurance companies have made passed onto customers.
“Some providers have established new refund policies, where the onus is on the customer to apply for a small refund, but this is not enough.
“As the crisis rumbles on, with no immediate end in sight for restrictions, it looks like drivers will continue to be penalised unfairly.
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“And with 550 million miles fewer being driven every week, the need for a more flexible and fit-for-purpose insurance and tax system is urgently needed in order to protect drivers from overpaying in this financially difficult time.”
Data from the firm have revealed that UK commuters have each driven around 30 miles fewer per week.
This means that the entire workforce has travelled up to 550 million miles less than they used to which has reduced the risk of drivers having a crash and making a claim.
The number of people travelling to work by car has also reduced dramatically from 14.8million to just 11.4million due to the pandemic.
By Miles data also reveals that 26million British drivers are using their cars less since the pandemic started.
Ash Phillips, a 31-year-old Company director from Bristol said he had not met his estimated mileage in 2020 as a result of the lockdown.
Mr Phillips has also revealed that his attitude towards using his car had changed which could spark disaster for insurance firms even after the pandemic has ended.
He said: “Initially, I estimated driving around 8,000 miles this year. My actual miles for the year will be much lower, mainly due to the pandemic as we’re not driving anywhere right now.
He added: “My attitude towards driving has definitely changed as a result of the pandemic.
“From a work and personal perspective, the new mindset is quality over quantity.
“If I’m going to drive somewhere, I want to make sure that it’s worth it, so it needs to be an occasion or an event or an experience, not just a trip to the shops that’s super flippant.
“If this is the case, I’ll look to walk or use the bus.”
The Association of British Insurers (ABI) has previously revealed that the number of car insurance claims did fall as a result of the shutdown.
Just 324,000 claims were recorded between April and June compared to 678,000 between January and March
The value of claims also declined by five percent meaning insurance firms did hold onto more revenue than usual.
However, the ABI has also claimed that insurers had passed on cost savings to customers as a result of the pandemic with average prices dropping.
They said that an average policy would now cost drivers just £460 in what was a four year low.
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