Jayne Dowle: Why you can’t insure against a dubious deal

I HAVE been building myself up to a rant about motor insurance. And now personal injury claims are pushing up premiums by an average £30 a year, I can hold back no longer.

We live in the “Whiplash Capital” of Europe, apparently, and this contributes to the sky-rocketing prices we pay to cover our cars. No wonder people just don’t bother. The cost of uninsured driving adds another £30 to every policy, according to the Motor Insurance Bureau.

Now, far be it from me to question a genuine claim for whiplash, or any other personal injury sustained in a car accident, but you can’t turn on commercial radio or go shopping without being ambushed by someone asking you if you have suffered a car accident recently.

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These ambulance-chasing firms have a lot to answer for, underpinning the compensation culture rife in Britain. Claims for whiplash have gone up by 25 per cent in six years, even though Government statistics suggest the number of “slight” injuries from traffic collisions is falling.

The complicated system of referral incurs serious expenses; while claims management firms and lawyers earn wads, drivers have to pay up to cover their fees, as well as the compensation itself.

Almost half of an insurance policy goes towards the cost of whiplash and personal injury claims, fraud, legal fees and tax. And according to the financial website confused.com the average cost of motor insurance is now £843 a year. Drivers in the North have been particularly badly affected; those in Bradford have suffered a 28 per cent increase in premiums year-on-year.

And don’t even get me started on young drivers. It’s pretty obvious why they might be considered more of a high-risk group than any other, and demand even higher premiums.

The thought of my own son getting behind the wheel before the age of 25 terrifies me. But my nephew, just turned 17, has his first car. To insure him in his own right would cost thousands more than the value of this modest motor. So he and his father have struck some deal involving the youngster being a named driver on his parents’ policy.

I know it is tempting to think that teenagers having cars of their own is an indulgence, but I’d just say this. Jobs for young people are so few and far between, and in so many areas public transport is non-existent, there is no choice – if you want to work, you have to learn to drive .

We’re told that the motor insurance industry is calling for tighter regulation of personal injury lawyers and claims management firms. That’s good. But if you ask me, they have a lot to do themselves.

If you’re wondering what’s been building up to my own personal rant, bear with me. I had been insuring my ancient Freelander with the same company for ages. When the renewal notice came through last year, the cost of the new premium was almost £200 more than the previous year.

I accept there could be contributory factors, but I had acquired no penalty points, and car crime and theft had actually fallen in our area. So I rang them for a little chat, and they had a look, but for some mysterious reasons they never quite managed to explain how they couldn’t get the premium below £600.

To cut a long and (very, very) time-consuming story short, I ended up shopping around and finding myself a new insurance provider. With some negotiation, involving my agreement to set it all up online, we agreed on the figure of £538. Not bad. But only because I had access to the internet, and enough patience and fast-enough broadband to complete my transaction. Without doing it online, it would have cost me £20 more. Draw your own conclusions from that.

Well, moving on. It’s renewal time. The good news is that my premium has actually dropped – to £510, amazing really. But let’s just look at the small print. If I renew it online again, I get £20 off. OK. But this still means I have to stump up £490 up-front.

If I do it on my credit card there will be a “handling fee”. If I do it by monthly direct debit, it will cost me another £61.71 “under the Credit Agreement at 12.1 per cent, equivalent to 26.1 per cent APR”.

Now, I would like to know this. I pay the gas bill, the electric bill, the council tax and even the television licence by monthly direct debit, without incurring a penny in interest charges. Is there any earthly reason why I can’t do the same with my motor insurance?

Yes, it is right for insurers to call for a clampdown on spurious claims, but it is wrong for them to profit from motorists, unless a customer has the time and patience to haggle, and then charging us over the odds for the privilege of paying. They want us all to insure our cars legally, and drive safely. So they should do everything they can to make it as easy and cost-efficient as possible for us to do so.