Insurers ramp up car insurance costs of unemployed by 400% – while some refuse to offer jobless cover at all
08:15 GMT, 20 June 2012
Insurers are heaping misery on to the millions of unemployed by ramping up their car insurance costs by more than 400 per cent.
When told by a policyholder about a job loss, insurance quotes will tend to soar on renewal of car cover, research for Money Mail shows.
Others — including Esure, Allianz and Shelia’s Wheels — refuse to offer cover to someone who is unemployed.
Increased risk: Insurers believe that an unemployed policyholder will use their motor more often, increasing the risk of accident or theft
This is because insurers worry jobless customers may not maintain and service their car due to financial strain, or fret they’ll become a higher credit risk and default on payments.
Insurers also believe they’re more likely to make a fraudulent claim, and, if the policyholder didn’t use their car as part of their job, will use it more often, especially in the day time, increasing the risk of accident or theft.
Leighann Forsyth, of broker trade association Biba, says: ‘The real problem for insurers is deciding what type of person they are, so they usually take the path of least resistance — and underwrite them all the same way.’
For example, a man aged 40 who was unlucky enough to lose his job would see a premium difference of 442 per cent through Hastings Direct or its sister company People’s Choice.
His car insurance would rocket from 248 a year if he were employed to 1,344 if he wanted the same cover as someone without a job.
The research, conducted by comparison website Moneysupermarket, also revealed Santander would hike its premiums from 359 to 1,365 — a shocking 280 per cent rise.
Churchill imposed a more modest 32 per cent increase on customers who lost their jobs, by increasing premiums from 375 to 497.
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