Fault claims and no-claims bonuses

Some people are upset that their insurer has accepted liability for an accident without asking them first. Most policies say the insurer can make their own decision about accepting liability – but we find that this hasn’t always been explained to the customer.

It's not our role to investigate the accident and decide who's responsible. But we'll look at the evidence you had available at the time to check that you made a reasonable decision. This may include evidence such as:

• accounts from the drivers involved
• witness statements
• engineers' reports
• CCTV footage

We hear from customers who are unhappy they've lost their no-claims bonus, or their premiums have increased due to an accident that wasn’t their fault.

In these cases, we’d look at the terms and conditions of the policy and check that your decision was in line with this. If a no-claims bonus has been affected by a fault or non-fault claim, we'll check whether you clearly explained to the customer that this could happen.

Cases involving insurance fraud

We see complaints where a customer says their insurer has paid out for a made-up claim, and is worried that the payout will cause their insurance premiums to increase.

We’ll look into whether your decision to pay out was reasonable, given all the information you had. If we find that fraud was a possibility, we’ll check what further investigation you did before deciding to pay out.

There’s more information about insurance fraud on the Insurance Fraud Bureau’s website.

We hear from people who’ve reported a car incident without making a claim, only to find their insurance premiums have gone up.

If your customer’s premiums have increased after they’ve reported an incident, we’ll ask you to explain why. We understand that an incident may suggest that someone is statistically more likely to make future claims than people who haven’t reported incidents. But we’ll ask you to explain the reasons for an increase.

If your customer reported an accident, but decided to pay the other person involved in the claim themselves, instead of making a claim

In these cases, we’d expect the claim to be recorded as ‘notification only’, and there shouldn’t be any reduction of their no-claims bonus.

We sometimes see complaints about no-claims bonuses after a customer has changed insurers.

If your customer insures a second vehicle with a different insurer

We’d only expect the premium on the first vehicle to increase if the customer transfers no-claims bonus is transferred to the second vehicle.

If your customer switches insurers mid-way through a policy

We wouldn’t expect you to award a no-claims bonus for a full year if a customer hasn’t completed the whole year on that policy. For example, if they cancelled their 12 month policy after 11 months, it would be unfair for you to award this as a year of no-claims.

Proof of a previous no-claims bonus when it’s higher than your maximum

If a customer has a higher no-claims bonus than you’ll accept, we’d still expect you to provide proof of the amount of no-claims bonus they came to you with – unless you’d always made it clear that you wouldn’t.

If you reduce a no-claims bonus

When a claim has been made we’d normally say it’s fair to reduce a no-claims bonus in line with your step-back process – as long as you made this clear to your customer when they took the policy out. If you didn’t, we’d need to think about what effect this had on them and their decision to take out the policy.

If your customer requests it, we’d usually say it was reasonable for you to give them a letter that sets out:

• the amount of no-claims bonus they started the policy with
• your business maximum
• how their no-claims bonus has been affected after a claim

If your customer changes insurers whilst a claim is ongoing

A policyholder can cancel their policy and set up a new one with a different insurer whenever they want, even if a claim is ongoing. But the claim will affect their no-claims bonus.

If a claim is settled in the policyholder’s favour, a reduction in no-claims bonus should only last until the claim is settled. If a claim is settled with the policyholder at fault, then you should release the proof of no-claims bonus, taking off a loss of discount for the claim. You shouldn’t withhold a no-claims bonus which has been earned. However, we might not interfere if you’ve done this because your customer owes you money.

Some people pay extra to protect their no-claims bonus, and are unhappy if their insurance premiums have risen after they’ve made a claim.

The rules about how the protection applies vary between insurers, so there can often be confusion about how no-claims bonuses actually work.

We’ll check the terms and conditions of the policy and the no-claims bonus to make sure that you’ve applied them fairly. If you haven’t, we’ll probably tell you to refund any extra money your customer has paid.