Fault claims and no-claims bonuses
We hear from people who are confused about why a fault claim has been put on their records, when an accident wasn't their fault. They’re usually unhappy because they’ve lost their no-claims bonus or no-claims discount, or because their premiums have increased.
No-claims bonuses and the way they’re applied varies between insurers, so we need to look at each case individually.
Types of complaint we see
We see complaints where the policyholder:
- lost their no-claims bonus or had a fault claim recorded, but they say the accident wasn’t their fault
- has no-claims bonus protection but their premiums have increased
- reported a minor accident without making a claim, but their premiums have increased
We sometimes see misunderstandings when a customer changed policies, or is insured on more than one vehicle at the same time. Some examples of these are where a customer:
- thought their no-claims bonus could be used on more than one policy at one time
- didn’t know their new insurer applies a maximum limit of no-claims bonus
- thought their insurer would accept a no-claims bonus that hasn’t been used for a certain number of years
- has a no-claims bonus as a named driver, but their insurer won’t transfer this to their own policy
- has a commercial no-claims bonus, but their insurer won’t accept this for a private car
- has built up a no-claims bonus outside the UK, but their insurer doesn’t accept this
Complaints about online sales
We find misunderstandings are more common where a policy was sold online, as the customer has fewer opportunities to discuss it with the insurer.
Information about no-claims bonuses isn’t always clear on insurer or comparison sites. For example, the customer may have to click on a help icon or a link to find out about it.
Handling a complaint like this
When you receive a complaint, you should reply to your customer within the relevant time limits.
A lot of the complaints we see involve some sort of misunderstanding or miscommunication. So it’s important that when you deal with any customer complaints, you make sure you clearly explain your reasons for making a certain decision.
If you don’t reply within the time limits, or the customer disagrees with your response, they can bring their complaint to us. We’ll check it’s something we can deal with, and if it is, we’ll investigate.
We’ll expect you to be able to show us that you’ve investigated the complaint thoroughly and have reflected carefully on the circumstances of the events.
What we look at
We’ll speak to both sides to find out what happened. If there’s been a misunderstanding or confusion about the policy, we’ll look at the policy terms to see what they said. We’ll consider how you highlighted this information to your customer when you sold the policy. We might also look at your sales process and if it was unclear, assess how this affected the customer.
Here’s a bit more detail on what we look at for specific complaints:
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Where you’ve settled a claim, but the customer says the accident wasn’t their fault
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 pay-out 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.
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Where a customer reports a minor accident without making a claim, but their premiums increase
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. -
Complaints where a customer has changed insurers
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. -
Where a customer has a protected no-claims bonus but their premiums have increased
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.
Putting things right
If we decide you’ve treated the customer unfairly, or have made a mistake, we’ll ask you to put things right. Our general approach is that the customer should be put back in the position they would have been in if the problem hadn’t happened.
For example, if we decide it was unfair for you to accept liability for an accident, we’ll tell you to change the way the claim was recorded, so he customer’s current premium can be recalculated. If the customer has been unfairly paying more for their insurance, we’ll also tell you to refund the extra money. Or if your customer service has been poor, we may tell you to pay compensation for any distress or inconvenience this has caused.
Find out more about how we award compensation.
Case study
Customer’s nine-year-old no-claims bonus is reduced to two years after an accident
Motor Insurance Insurance
Technical desk
If you want to talk informally about a complaint you’ve received, you can speak to our technical desk. Our technical desk can give general information on how the ombudsman might look at a particular complaint. We also offer guidance on our rules and how we work.
Find out how to contact our technical desk.
Information for consumers
If you’re a consumer looking for information on complaints about fault claims and no claims bonuses, you can read more about this on our dedicated information page for consumers or to make a complaint, find out more about how to complain.