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Just a fifth of stay home drivers receive car insurance refund

Paloma Kubiak
Written By:
Paloma Kubiak

Only one in five drivers heeding government advice to stay at home have received a car insurance premium refund, an investigation has revealed.

Despite half of motorists reducing their mileage during the national lockdown restrictions, just a fraction saw a premium refund as a result.

One driver said they had driven just 40 miles between March and July, while many said their policy had lost value.

The research by consumer champion Which? revealed that just 21% of the 2,386 car insurance customers polled have seen some of their premium repaid.

But, one in seven (14%) car and home insurance customers have struggled with their premiums in the pandemic, as did three in 10 (29%) of private medical insurance (PMI) customers.

While most struggling customers said they had received some kind of financial support from their car insurer, up to a quarter (25%) received no support whatsoever.

In some cases, Which? said this was potentially down to customers not knowing help was available.

But it added that insurers have made payments to at least some of their customers, with some also claiming to be passing savings back in other ways.

In April last year, Admiral announced it would give money back to four million car and van drivers as a result of fewer cars on the roads and fewer claims amid the pandemic lockdown. It is the only UK insurer to have proactively rebated customers.

Which? said it is concerned that the City regulator, the Financial Conduct Authority (FCA), no longer requires insurers to proactively contact potentially vulnerable customers who miss a payment.

As such, it is calling for insurers to do more to support customers struggling financially as a result of the pandemic by taking every step they can to engage with and help those who need it most.

‘Many are struggling with their premiums’

Harry Rose, editor of Which? magazine, said: “While insurers could not have predicted the unprecedented impact of coronavirus, customers will not appreciate it if they feel firms are benefiting at their expense – or if they are being left without support at a time of need.

“Our research shows that many insurance customers are struggling with their premiums as a result of the pandemic, but up to a quarter of these people have received no support whatsoever.

“The FCA rightly proposed guidance for firms to support customers struggling due to coronavirus, but it’s concerning that the regulator is no longer requiring insurers to proactively contact those who miss a payment. Customers missing payments are likely to be vulnerable, and firms should be doing everything they can to engage with and support those who need it most.”

‘Underlying cost pressures remain’

An Association of British Insurers (ABI) spokesperson, said: “ABI’s Motor Premium Tracker shows that the average cost of comprehensive motor insurance is at a four year low of £460. Our data from ABI members shows that during the first national lockdown, the value of the average claim paid rose by 27%, despite fewer claims. In the first three quarters of 2020, there has been a 25% fall in motor claims notified compared to the same period in 2019, but underlying cost pressures remain, such as increasing cost of vehicle repair.

“During lockdown, it is true that many motorists have used their vehicles less. However, drivers are legally obligated to have insurance for when they do drive as well as to protect against the risks of theft and damage. Insurers have, and continue to give extra support to motorists given the exceptional circumstances, including automatically covering those using their vehicle for community volunteering, commuting to work, as well as helping those worried about being able to continue paying their premiums by instalments. Any premium adjustments or refunds will be a matter for individual insurers.”