online technical resource
Motor insurance is designed to provide cover against losses and liabilities that the driver may suffer in the event of an accident, theft or certain other events relating to their vehicle.
It provides financial compensation to cover liability for any injuries caused by the driver or owner of a vehicle to other people or their property.
It is compulsory by law to have motor insurance before using or keeping a motor vehicle on public roads.
Motor insurance covers private vehicles against specified risks depending on the type of policy. There are three types:
- third party
This is the minimum legal requirement for all drivers. It provides cover in the event a driver becomes legally liable for injuring a third party or causing damage to a third party's property. It does not provide any cover for the driver's own vehicle.
- third party, fire and theft
This includes the legal minimum insurance cover for driving - as well as basic cover against two non-driving risks - fire and theft.
- comprehensive cover
This provides wider insurance cover - though not against every eventuality. It covers third party, fire and theft - as well as additional cover for some damage caused to the driver's own car.
We see complaints about all aspects of motor insurance including:
- the sale of motor insurance
for example - complaints that an exclusion clause was not drawn to the attention of the policyholder at the time the insurance was taken out;
- claims on motor insurance policies - where the insurer disputes liability for the claim
for example - complaints that the insurer says the policyholder left the keys in an unattended vehicle;
- issues that arise during the settlement of claims - once the insurer has accepted that a claim is covered under the policy
for example - complaints that the insurer says the vehicle is worth less than the policyholder expects;
- the administration of motor insurance policies
for example - complaints about whether or not an intermediary passed on the proof of the "no-claims discount" that the insurer wanted.
how we decide complaints about motor insurance
ombudsman news features on motor insurance complaints
the sale of motor insurance
When a driver buys a motor insurance policy, the insurer, intermediary and policyholder must all act in "good faith" - to ensure that both sides understand the cover that is being asked for and provided.
If there is a problem when the policy is being sold, it may only become apparent when the driver makes a claim under the policy. The insurer may refuse to pay part or all of the amount claimed - or may "void" the policy altogether, treating it as if it has never existed.
Problems like this include "fronting" - where a parent insures a vehicle saying they are the main driver, while actually their child is the main user. By insuring the vehicle in the parent's name, the premium cost will be much lower.
We regularly see complaints that:
- the seller of the motor insurance did not bring a feature of the policy or an exclusion to the policyholder's attention;
- the policyholder did not tell the insurer about standard modifications made to the vehicle, driving convictions or previous accidents or claims - and the insurer will now not pay the claim in full or in part;
- the policyholder did not provide accurate information about the main driver of the vehicle - and the insurer will now not pay the claim in full or in part;
- the intermediary or price comparison website did not pass on information accurately.
how we decide complaints
When making a decision on a complaint, we consider all the relevant circumstances and the arguments put forward by the policyholder and the insurer or the seller of the policy, including:
- how information was presented to the policyholder;
- what the insurer or broker told the policyholder about the policy;
- what information the policyholder was asked to provide - and how the policyholder answered those questions in relation to their situation.
ombudsman news case studies involving the sale of motor insurance
- insurer brought exception regarding keys in cars to policyholder's attention
case study 38/5, July 2004
- insurer failed to notify policyholder of new policy terms
case study 01/26, January 2001
- policyholder failed to notify insurer of modifications and previous claims
case study 01/24, January 2001
case study 72/2, October 2008
case study 79/10, September/October 2009
case study 79/11, September/October 2009
case study 7/18, July 2001
case study 7/19, July 2001
case study 48/2, August 2005
- policyholder failed to notify insurer of motoring convictions
case study 25/14, February 2003
claims on motor insurance policies
Many claims by policyholders are settled without any issue. But some claims may be disputed by an insurer. This could be because of uncertainty over details of the event leading to the claim. Or it could be because the insurer believes that the policyholder did not disclose details when they took out the policy that the insurer considers to be "material".
This can lead to an insurer rejecting the claim - or "voiding" the policy altogether, treating it as if it has never existed.
For claims relating to accidents, we often see complaints that the policyholder believes the insurer has not settled the claim appropriately.
how we decide complaints
When making a decision on a complaint, we consider the evidence and the views of both the insurer and the policyholder on issues such as:
- how the vehicle came to be stolen or how the accident happened;
- how the policyholder reported the theft to the police;
- who had access to the vehicle and /or the keys;
- any technical reports submitted by the policyholder and the insurer;
- what the policyholder told the insurer about the vehicle when they took out the policy;
- how the vehicle was damaged;
- what the insurer told the policyholder about the insurance policy.
ombudsman news case studies involving claims on motor insurance policies
our technical note claims on motor insurance policies
ombudsman news features on "keys left in car"
issues that arise during the settlement of claims
Secondary issues may arise when an insurer has agreed to accept liability for a claim under a motor insurance policy - but the policyholder believes something has gone wrong in settling the claim.
For example, the policyholder may not be happy with the quality of the vehicle repairs, or with the level of service provided by the insurer, or with the valuation placed on the vehicle by the insurer.
Complaints about these issues may be brought separately or in conjunction with a complaint about the claim itself.
We see complaints about the following issues:
- the repairs were substandard or took too long to complete;
- the insurer's valuation of a written-off vehicle was too low;
- the insurer did not return the vehicle, or the contents of the vehicle, to the policyholder;
- the insurer did not provide a courtesy car;
- the insurer did not re-instate the policyholder's "no-claims discount";
- the insurer did not return excess premiums after re-instating the policyholder's "no-claims discount";
- the insurer provided poor customer service when dealing with the claim.
how we decide complaints
We consider all the facts and arguments put forward by the insurer and the policyholder - as well as applying our own experience and judgement.
ombudsman news case studies involving issues that arise during the settlement of claims
our technical notes covering related issues
complaints involving the administration of motor insurance policies
We deal with a significant number of complaints involving the administration of motor insurance policies. These problems may affect many insurance policies and are not unique to motor insurance. They include complaints about:
- whether information provided to the intermediary is sent to the other party to the policy;
- unexpected changes sought by a broker or intermediary;
- the insurer increasing the premium or changing the terms when the policy was renewed;
- the insurer cancelling or refusing to renew the policy.
how we decide complaints
We look at the relevant responsibilities of the policyholder, the insurer and the intermediary - and how they carried out these responsibilities.
ombudsman news case studies involving the administration of motor insurance policies
This is part of our online technical resource which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.