Money Help Desk: Driver's dilemma over every bump and scratch

I RECENTLY contacted my insurance company to change the details relating to my wife's car that we had just replaced and it coincided with renewal of the policy.

In the process of the conversation with a pleasant adviser, I was asked if I had had any accidents or collisions and confirmed that I hadn't, but jokingly added "apart from scraping the gate post". The adviser asked for more information and I explained that it caused hardly any damage and most of the scratches on the paintwork just polished out and I didn't make a claim.

However, she went on to press me on the date and details of exactly what happened and I began to feel a bit out of control – to me it was just a trivial thing, mentioned in a jocular way and didn't result in a claim, but she was taking it seriously.

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The adviser then revised the quote she had initially given me, saying that the scrape was a "material factor" or words to that effect and said she would add 13 to my premium. I got a bit cross with her at that point, although she later agreed to waive the premium increase. The incident would nevertheless remain on my record.

This is a warning to other people not to mention minor scrapes because it might cost you money. Would all insurance companies behave this way?

GW, Edinburgh

Ian Crowder, insurance expert at the AA, writes:

What you describe is an interesting dilemma: whether or not to tell your insurer about every little dink and bump.

However, in every car insurance contract, regardless of who the insurer is, policy terms and conditions will say that you must disclose any collisions regardless of fault and whether or not a claim is made when you either renew your policy or take out a new one.

But I'm sure most insurers will be well aware that the majority of their customers would probably not bother mentioning minor scrapes and would take a reasonably pragmatic view if it was mentioned. Strictly speaking, you were correct (even if unwittingly so) in disclosing it and the adviser was correct in noting it.

Essentially, there are two reasons for this. Firstly, in a subsequent collision, an insurer would want to know that earlier damage wasn't being included as part of the later claim.

Secondly, it is possible that unseen damage might have been incurred that could contribute to a later accident. Say, for example, you had hit a kerb and had your wheel and suspension repaired and did not tell your insurer, but there was further damage not noticed at the time that later contributed to an accident (for example, through suspension or brake failure). If it then came to light that the previous incident contributed to the later claim the insurer would consider this to be "non-disclosure" and might even refuse to meet your part of a claim. So honesty really is the best policy.

However, different insurers will treat incidents such as yours in different ways and what happened in your case is probably not what your insurance company had in mind when they set their pricing rules, which the adviser was sticking strictly to. Some insurers may make a small increase in premium but most probably wouldn't. But I believe all would record such a disclosure as a material fact, just as they would a more serious non-fault accident that could affect the premium you pay in future.

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