Losing your no-claims bonus is an expensive business. Your insurance premium can go through the roof, so many people will choose not to claim for a trifling incident, in order to keep the cost down.
However, a report has revealed that you may still see your premium rise.
The issue was raised on the BBC's Moneybox programme. Listener, Kevin England, had his car stolen after thieves fished his car keys out of his home using a pole poked through the letter box. He informed his insurer and it arranged car hire.
After two days the car was recovered, and England called his insurer. He asked if he could pay for the car hire, and therefore avoid making a claim and losing his no-claims bonus. They agreed and he paid up.
The problem came when England renewed his policy. There was no change to his no claims bonus because there was no formal claim. However, his premium rose £100 because it had been recorded as an 'incident'. He said the insurer had informed him that having an incident means they see you as more of a risk, so your premium is increased.
Not aloneThe incident isn't just recorded by your insurer, it goes on a database called CUE, which is shared by 60 insurers. It means that your incident will follow you even if you switch insurers.
This included the man who was driven into in a car park and swapped insurance details before the individual who hit his car paid for the damage hilself. He made no claim, but his premium rose 7%.
It also affected the woman who had her car keys stolen from a gym locker. Her car wasn't taken, but she called her insurer to check if she was covered for replacement locks. She wasn't covered so never made a claim, but the incident was recorded and added £300 to her policy.
On The BBC programme, The Association of British Insurers defended the insurance firms' right to use the database in order to assess the risks posed by each driver, but they agreed that customers should be warned of the consequences of telling their insurer about an incident.
Of course, this doesn't mean you should keep quiet about any incident. If you read the small print on your documents, you'll see you are required to inform your insurer about any accident, loss, or claim, and if you don't report it they can cancel your policy.
But can this be fair? What do you think? Let us know in the comments.