Car insurance loopholes you've never heard of

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Underinsured motorists pay out £73 million in unforeseen costs a year. Does your cover offer everything you need?

According to research from Sainsbury’s Car Insurance, drivers in the UK paid out £368 million during the past five years because their insurance didn’t cover common motoring problems.

On a yearly basis, this insurance shortfall costs more than £73 million on top of insurance premiums.

With the expenses of petrol, toll roads and car maintenance already weighing heavily on many motorists’ budgets, an unforeseen expense is the last thing any of us need.

So could holes in your insurance policy leave you out of pocket?

Common holes in policies

The hiring of courtesy cars is one of the most common expenses for underinsured drivers. According to Sainsbury’s data for the past five years, more than a million people have had to pay for a courtesy car following an accident.

Unless you have a comprehensive policy, it’s unlikely your insurance company would provide you with a courtesy car. This could leave motorists especially vulnerable if they have third party or third party fire and theft insurance. However, it is possible to add this kind of protection to your policy with a courtesy or vehicle hire addition.

If you do have an accident, there's a strong chance your insurance company won't reimburse you for your transport home. According to the research, 820,000 drivers have been left with an average bill of £123 to meet such expenses.

Of course, losing your car keys or having them stolen is a frustrating experience. However, this predicament could also work out much costlier than you had bargained for – with 660,000 Brits paying an average £99.33 for replacements.

If you’re a parent, be aware that three quarters of policies do not cover children's car seats. As a consequence, more than 230,000 drivers have paid out £29 million, or £123.94 on average, to replace these.

What else you need to know

If you need to make a claim on your insurance and the company believes you have been negligent, it may refuse to compensate you.

For instance, an insurer is unlikely to reimburse you if your vehicle is stolen after you have left your keys in the car, your door unlocked or the window open.

Many drivers also wrongly believe they can avoid any increases in their insurance premiums by protecting their no claims discount.

Doing so normally allows you to make one additional claim without losing your no claims discount. However, this doesn’t necessarily mean your premiums won’t increase following a claim as the incident will still appear in your driving record.

How to get the right level of cover

Although it might be tempting to opt for the cheapest quote, doing so could leave you without adequate cover should you need to make a claim – as the data from Sainsbury's proves.

However, you could also end up overpaying for your premiums by choosing add-ons you’re unlikely to use. For instance, drivers who never take their cars abroad probably have very little need for overseas cover.

Likewise, there would be no benefit in adding breakdown cover to your car insurance if you already have separate cover for this.

**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**

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