In this article, we help to dispel and demystify some of the most common myths around car insurance,
Searching for the best value car insurance can be an onerous task at the best of times and can be made especially frustrating with so many myths circulating. So we've decided to separate the fact from the fiction, hopefully making the space that bit more easy to navigate.
1. Insurance companies hide cheaper premiums
This is one of the things you often hear people say when they get frustrated about the cost of their insurance, but it’s important to state that it is untrue, mainly because it is illegal to do so.
Before your policy is due to expire, motor insurers are now legally obliged to provide you with details of all the cover options that are available to you i.e. third-party, third-party fire and theft, and fully comprehensive. This will be outlined on your renewal notice, which must be issued at least 20 days before the expiry of your insurance policy. Your no claims discount certificate must also be included with your renewal notice so that if you decide to shop around you'll have this to show to your new insurer.
2. Your no claims bonus is carried over indefinitely
As a general rule your no claims bonus will not be carried over indefinitely in every circumstance. For example, if you have no insurance in your own name for two or more years, many insurers will not give you your no claims discount when you reapply for insurance cover. This is especially important for those who may be paying for insurance but plan on travelling abroad for a prolonged period of time and won't have a policy active in their own name. Checking with your provider is always the best place to start to see where you stand.
3. Young drivers can't get insured
While young drivers can, in fact, get insured, the issue is that the price charged is more often than not extortionate and even more often than not charged to the Bank of Mum and Dad, with varying levels of success!
The good news, however, is that new technologies are opening the proverbial door for newer drivers to get insured for less. Take, for example, telematics car insurance, which a number of insurers in Ireland are now jumping on board with.
Telematics involves tracking a combination of on-board diagnostics such as a car's acceleration, location, time of use, and various other metrics so that insurers can analyse how safely you drive. It works by fitting a telematics box to the car in question, and importantly for newer drivers can significantly help in reducing premiums.
4. The cheapest policy is always the best option
Choosing an insurance policy, be it health, house or motor, can be a time-consuming task and the tendency is for people to simply choose the cheapest cover. But when it comes to insuring your vehicle, cheapest is not always wisest. Choosing the policy which best suits your needs is always the best route to go.
For example, while third-party, fire and theft allows you to claim for any loss or damage to your car as a result of fire or theft, comprehensive cover on the other hand, as well as including the former, also allows you to claim for damage to your own car in the case of a collision, regardless of who is in the wrong. Meanwhile some insurance policies will also include breakdown assistance or no claims discount protection as standard, which could prove to be invaluable to some people.
Finding the best-suited policy for you takes time, but it's important to make sure you choose the cover that's right for you.
5. Having a provisional licence won’t affect the price I'm quoted
This is unfortunately untrue.
Car insurance companies look at a multitude of factors when calculating the cost of your premium, including the size and age of your car, the age of the driver, and even your profession and what you’ll be using the car for. When it comes to the licence you hold, drivers with a provisional licence are seen as more of a risk than those with a full licence and will thus be charged more.
6. Private and commercial car insurance is the same
This is again untrue. One of the factors insurance companies take into account when assessing a request for cover is whether the vehicle in question will be used in a private or public capacity, for personal or business use.
When assessing risk, insurers most frequently look at what's called 'exposure', which assesses a vehicle's susceptibility to risk. For example, a commercial vehicle that travels 40,000 kilometres per annum will be more 'exposed' than that of a private vehicle travelling half that as there'll be more potential for loss, theft or damage to the vehicle.
7. Third-party, fire and theft is the minimum cover required by law
This is actually false. It is, in fact, just third-party cover that is the minimum required by law. The options available to consumers begin here and move to third-party, fire and theft, which is most common, to fully comprehensive insurance cover.
Plans and prices differ greatly depending on the cover you require so, like anything, shopping around is always advised.
8. Insurers are not allowed to apply differential treatment
You would think this is the case, however, under section 5(2) of the Equal Status Act, 2000 car insurers in Ireland are allowed to price discriminate and charge different customers different premiums based on their age, residence, as well as other factors. For example, if you’re a young driver living in the city and it’s your first time purchasing cover then your premium will be higher than an older driver who lives in a rural area.
9. Insurers can discriminate based on sex
Unlike the point made previously, insurers cannot charge you a different premium based on your sex alone due to an EU ruling several years.
For those familiar with websites targeted particularly towards the female demographic, it's important to note that this is purely driven by marketing and your gender can have no bearing on the price an insurer is allowed to quote you. So all other things being equal, whether you're male, female or non-binary isn't important.
10. Your insurance will pay out the full price of you car
If you're in a serious accident and your car gets written off, your insurer will only pay out the value they say your car is worth at the time of your claim even if you have fully comprehensive cover. This means if you took out a loan to buy your car, the payout may not always be enough to cover what's remaining.
11. My job title makes no real difference to my quote
You might think that being asked about your profession makes no real difference to your premium and that it's just an administrative detail but this is false. Your occupation can indeed have a real impact on the cost of your insurance policy and it all comes down to the exact wording of your job title.
As a general rule, “music teachers” will pay more than “teachers”, “office managers” more than “office administrators”, and “construction workers” more than “builders” who – in turn – pay more than “bricklayers”.
On the flipside, describing yourself as a parent, housewife, house-husband or as being retired instead of being unemployed will reduce your premium.
While it's worth experimenting to see how different job titles affect your premium, make sure not to lie about your job e.g. don't say you're a teacher if you're a construction worker. That is illegal and could get you prosecuted for fraud.
12. Named drivers can build up a no claims bonus
A 'named driver' is someone who is insured to drive a vehicle in which another person does most of the driving (the 'main driver'). Younger drivers often add themselves to their parents' policies as 'named drivers' to help reduce the cost of insurance. However only the main driver can build up an official no claims bonus and named drivers on the policy cannot. In some cases, a young driver can build up driving experience on their parent’s insurance policy, which in time can be converted into a form of no claims bonus. This is dependent on the insurer, however.
13. The main driver of a car doesn’t have to be the policyholder
This is false. It's also illegal and is known as ‘fronting’. This essentially means having an older or more experienced driver - usually a parent - claim they're the main driver of a car that's mostly driven by a young person, or another high-risk motorist, in order to reduce the cost of car insurance. The main driver of the car must be the one named on the policy and classified as the individual taking out the insurance.
Adding a parent’s name to your policy as an additional (or secondary) driver isn’t against the law, however, and this could help bring down your premium. Just don’t put them as the main driver.
14. An insurance quote never expires
The length of time a quote is valid for will depend on the relevant insurer or broker but will usually last for a period of 30 days, or one month, but will always expire. Again, this is insurer or broker dependent so it will be determined by who actually gives you the quote. The same applies to discounts, but oftentimes these will expire at a much quicker pace than policy quotes, by the end of the week, for example.
15. You can claim for less than the excess
You will not be able to claim for amounts less than the excess.
The excess is the first part of any claim you must pay which is usually up to a couple of hundred euro, but will depend on the policy you choose. Most insurance policies will include an excess so when looking at policies this should be one of the things to look out for.
As a general rule, the higher the excess, the lower your insurance premium will be.
Let us know your thoughts
If you know of any more myths that exist around car insurance and need debunking just let us know in the comments section.