Car Insurance

5 Seemingly Harmless Things That Can Get You In Trouble With Your Car Insurer

Some habits are harmless, others may result in significant financial loss. Read on to find out what seemingly innocuous habits may end up harming your relationship with your car insurer.

We all know that drink driving or texting while driving will get you in trouble. However, besides these glaringly obvious examples of driving faux pas, there are other certain seemingly innocuous things that can get you into quite a bit of trouble with your car insurer. Some of these things can be as slight as being careless with your car's mechanics while others may have repercussions that are far worse than just a declined claim. Below, we outline some actions or habits that may result in either a denied claim or even a loss of your policy.

Not Following Post-Accident Procedures Correctly

Perhaps you got involved in a minor fender bender with a friendly driver who assured you that there was no need for you to report to your insurer, as it will be a much better option to spend the next few days negotiating a private settlement. Because the damage ended up being minor and may only result in a few hundred dollars of repairs, you may feel this is a more hassle-free alternative to getting your insurer involved—especially if you were the one at fault. However, no matter how small the damage is, taking more than 24 hours to report the accident (regardless of whether you plan to file a claim) will get your car insurance claim rejected and you may suffer an NCD penalty, which will result in higher renewal premiums.

If you were involved in an accident with a third party, it is better to let your insurer know what happened as soon as possible. This should be done even if you are planning to settle privately, as you are never fully cognizant of the third party's intentions (they may decide to sue you, send you a bill for exorbitantly priced repair work or even try to defraud you). During this time, you should also report all third party communication to your insurer and do your best to avoid admitting any kind of guilt (including apologising). While it may seem like a hassle, promptly informing your car insurer of the accident has its benefits: car insurers usually provide emergency assistance services that will evaluate the damage caused, examine the scene of the accident and help you start the claims process, all of which can lead to a successful claim.

Not Being Careful With Your Car Parts

Most habits usually don't result in serious losses, but driving habits like being rough with your gas pedal, aggressively turning or misusing your clutch or handbrake can result in serious mechanical damage to your car over time. In the event you get into a car accident because your car malfunctioned after years of misuse and a lack of routine maintenance servicing, you may have a harder time convincing your insurer to cover for the damages. This is because there is a clause in most insurance companies' policy documents that states that you should maintain your car in a roadworthy condition and they may reject your claim should they find out that the accident was caused by mechanical, electrical or structural breakdowns.

This image shows a screenshot from FWD's policy document showing the exclusion of accidents due to wear and tear, mechanical and structural breakdowns

Letting Someone Else Drive Your Car

Let's say you're running a fever and you need someone to get you medicine as soon as possible. You ask your family member to drive to the nearest pharmacy and on the way back from the pharmacy they get into an accident. Luckily, no one's hurt but your car will need to get checked out at a repair shop. If the person who drove your car was not an authorised driver and is not covered by your insurance policy, you will be in violation of your policy and you will have to pay for the repairs out of pocket. As an alternative, you can consider spending a bit more on your car insurance by adding named drivers or opting for an authorised driver plan. If you don't wish to add a driver to your policy, you can consider services like Amazon Prime Now, RedMart or Grab when you aren't able to run errands yourself.

This table shows a sample of car insurance policies and how much they charge when the number of drivers per policy changes

Leaving Your Car Door Unlocked

While Singapore is a safe place and motor vehicle & related thefts have been steadily declining, there were still almost 1,000 cases of motor vehicle and related theft in 2017. Generally, car insurers should cover car theft regardless of how it happened, but they may still give you a hard time if they find out you were careless enough to leave your car door unlocked with valuables left out in the open. If your insurer denies your theft-related claim, it will most likely be due to the wilful negligence clause in your policy stating you will not be covered if you do something you know is negligent and can result in a claim. This means that doing something as innocuous as leaving your car doors unlocked while you run in to a store to pick something up can result in losses that won't be covered by your insurance.

This graph shows the annual cases of motor vehicle and related thefts between 2014 and 2017

Not Letting Your Insurer Know of Life Events

You may think that things such as getting married, divorced or moving to a new apartment are not relevant to your car insurer and thus you don't need to notify them of the changes. Failing to disclose these events, or "forgetting" to mention them to your insurer will not sit well with them as they will perceive you to be untrustworthy and they may end up voiding your entire policy. This is because events that are considered major life events change your risk profile and will usually result in a change of premiums. For instance, when your young adult child finally gets his licence, adding him to your insurance will most likely increase your premiums, but getting married will generally lead to lower premiums.

This graph shows how married policyholders will pay lower car insurance premiums than single policyholders

Leaving Your Pet or Child in the Car

While it may seem okay to leave your pet or child in your car for just a few minutes, it is actually a very dangerous practice that can result in death. Even when the temperature is a balmy 29 degrees, the inside of your car can heat up to 40 degrees in just 10 minutes, leading to a high chance of heatstroke, especially for children and dogs who can't control their internal body temperature as well as adults. Now, what can happen if someone sees your dog or child suffering in the hot car and chooses to take action by breaking your window or calling the police? It can be possible that your insurer will choose not to cover the damages. They can claim negligence on your end (you should have known better not to leave your loved one in a hot car) and you may be left paying for the damages yourself.

This graph shows how hot your car gets during specific temperatures outside
Anastassia Evlanova

Anastassia is a Senior Research Analyst at ValueChampion Singapore, evaluating insurance products for consumers based on quantitative and qualitative financial analysis. She holds degrees in Economics and International Business Management and her prior working experience includes work in the capital markets sector. Her analyses surrounding insurance, healthcare, international affairs and personal finance has been featured on AsiaOne, Business Insider, DW, Vice, Her World, Asia Insurance Review, the Australian Institute of International Affairs and more.

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