free information,tips for car and insurance: Beware the car crash bandits

Minggu, 06 April 2008

Beware the car crash bandits

he Daily Mail and The Mail on Sunday are always on the look out for new villains, and this time it’s not illegal immigrants or teenage mothers. No, Stephen Womack in the Financial Mail on Sunday has discovered the crooks that stage car crashes – the car crash bandit. The fraudsters pin the blame on the innocent driver so they can submit a bogus claim against the victim’s insurer for up to £30,000.

Usually staged on motorway slip roads and roundabouts, the car in front brakes hard, sometimes after a second car veers into its path, forcing you to crash into the back of it. The crooks will claim for damage to the car and the cost of a replacement vehicle, often inflating the claim in several ways.

The car might be carrying several passengers, all of whom will claim for personal injuries and loss of earnings. Some gangs even own accident repair garages and car-hire firms. There are apparently 10,000 staged crashes a year, costing the insurance industry up to £200 million. You have been warned!

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“Pay as you go” car insurance – will it work?

A full 90% of us rate ourselves as above-average drivers, according to one well-known Princetown University survey. Statistically this is clearly impossible, but if you are convinced you are a low-risk driver the insurance industry might have a deal for you. The concept, trialled by Norwich Union, is called “pay as you go” (PAYG).

Users are charged for their car insurance on a monthly, rather than annual, basis. As well as factors such as location and type of car, the cost varies according to how often and at what time of day you drive. Norwich Union says young drivers are ten times more likely to have an accident at night than during the day.

So, PAYG insurance for 18 to 23-year-olds ranges from a few pence a mile during daylight hours, up to £1 a mile in the 11pm to 6am danger zone. The insurer gets this data via satellite from a “black box”, a GPS device about the size of a video cassette that is fitted to your car for a one-off fee.

So could this be the future of car insurance? The concept seems sound enough. Unlike using DNA to tailor health insurance cover, which seems unfair, we all have some choice about how, when and where we drive. PAYG addresses critics of the current system who argue that infrequent, safe drivers effectively subsidise high-mileage drivers – who also tend to be from higher income groups. Any system that offers incentives to drive fewer miles should cut pollution and help relieve congestion. It may also appeal to parents whose teenage offspring are buying their own cars for the first time – in terms of encouraging safer driving and cutting insurance costs.

But the idea is unlikely to spark an insurance revolution. While it could help some young drivers to find affordable insurance, the financial benefits of PAYG for experienced drivers are unclear.

Claims that it offers big discounts to low-mileage drivers are fine except that other “conventional” insurers, like the AA, adjust premiums to reflect this anyway. Worse, if your driving habits are even slightly unpredictable, working out whether you will save money by switching is tricky and, given the wide range of charging rates, getting your maths wrong could be costly.

Most tellingly, despite growing numbers of cars coming fitted with anti-theft devices or SatNav software, tracking devices are hideously unpopular – a moneysupermarket.com survey last year found that nearly a third of us would not agree to a “black box” (which not only captures where you’ve been but also how fast you got there), even if it cut insurance premiums to zero.

It seems the idea of being penalised for driving at certain times or to certain places sits uneasily with one of the main reasons people buy a car in the first place – personal freedom.

free information,tips for car and insurance

Minggu, 06 April 2008

Beware the car crash bandits

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“Pay as you go” car insurance – will it work?

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