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Are you underinsured? Motorists urged to get up to speed with car insurance

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Written by: YourMoney.com
25/08/2016
A worrying number of motorists don’t understand their car insurance policy and could be putting themselves at risk of being underinsured as a result.

This is according to research carried out by Swinton Insurance.

Here, Richard Beaven, distribution director at the insurer, reveals some of the most common misconceptions.

Myth 1: Comprehensive car insurance fully covers you to drive someone else’s car 

One in three (33%) of the drivers we spoke to wrongly believed that they are fully covered to drive someone else’s car if they have purchased comprehensive car insurance – and a further 14% didn’t know either way, meaning only just over half (53%) correctly identified that they are not fully covered.

The facts: ‘Driving other cars’ cover is risk specific and will depend on factors such as driver age and driving experience. The cover provided for driving other cars is also third party only, so would provide no cover for damage to the vehicle being driven.

By driving another car without insurance – whether knowingly or not – motorists run the risk of an IN10 licence endorsement, meaning six to eight points on their licence and a potential spike in future premiums. It will also stay on their licence for four years.

Myth 2: I won’t need to pay any excess if I’m in an accident and another driver is responsible 

More than 4 in 10 drivers (43%) told us they believe that if they are in an accident and another driver is deemed responsible, they won’t need to pay any excess at all, while 16% were unsure about who is responsible.

The facts: Across standard insurance policies, an excess is payable on any claim regardless of fault – though this may be recouped from the other party at a later date, depending on circumstances.

Myth 3: All comprehensive or third party fire and theft insurance automatically covers theft of a vehicle, no matter where it is stolen from 

In our research, almost two fifths (39%) of drivers believed any car insurance policy covers this, and nearly a further fifth (19%) admitted they didn’t know. Just 42% were correct.

The facts: Cover depends on individual circumstances. For example, if a policy has been agreed on the basis that a car is kept locked in a garage overnight and the car is then stolen from another location, a claim may not be upheld.

Drivers should talk to their insurance broker if their parking circumstances change. For example, if a driver regularly starts to park elsewhere overnight, such as at a partner’s house or at a train station, they should let their insurance broker know to ensure their insurance is still valid.

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