Car insurance loophole that could cost you thousands and even your car – what you need to check now
Gillian renewed her car insurance in February – but after having an accident, was told she wasn’t actually covered
It can be tempting to toss aside or quickly scan boring insurance documents. But the devil is in the detail.
Many insurance companies automatically renew policies as standard these days, apparently for customer convenience.
With this being the case, some people see their insurer’s logo on the envelope and simply file it in the top drawer. But things can get messy if you do not know your policy’s proper terms and conditions. A reader called Gillian got in touch with me asking for help on this very issue. She received her new policy documents in February. She had a quick look and thought it all seemed the same as the year before, so filed it away. Disaster hit a fortnight later when her car was stolen and burned out by thieves.
Gillian contacted her insurer, who she has asked me not to name at this stage, to make a claim. And she was shocked to discover she was not insured.
She assured them she was because she had all the paperwork and a policy number.
But she was then told she had failed to confirm that she wanted the policy – so it had been cancelled for her.
For the past three years, Gillian’s policy had auto-renewed without any need for action from her, so she naturally assumed it was the same system. Gillian, who lives in Rochester, Kent, has argued this with the insurer but has got nowhere.
And it gets worse.
As well as no pay-out it means she has also broken the law by not having insurance. I have looked at the papers and it is not plainly obvious that you are expected to contact the insurer to confirm acceptance of the policy. It is a mistake I can see happening easily if you do not read everything very carefully. This, coupled with the fact the policy had auto-renewed before, gives her a strong argument.
I have advised her to lodge a claim for free with the Financial Ombudsman. Still, this should be a warning to others. Do not take anything for granted. Read documents carefully. And call the provider when it comes to renewal time to make sure everything is in order.
News Source: Dean Dunham