Is this a dishonest way to reduce the cost of insurance? Watch

Arran90
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A friend bought a very low insurance group car that was an old banger. He insured himself on the car with no intention to drive it. The car was stored off-road on SORN. As the car was not being driven there was 100% chance that he would not make an insurance claim. A few years later he had built up a no claims bonus for a car that he would actually drive and cut his premium by more than half (according to a comparison website). In the intervening years he had spent most time living outside of Britain.

Is this a dishonest way to reduce the cost of insurance?
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xDron3
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Was he the policyholder? If he has valid proof of NCB and had a valid licence throughout the time then there's nothing wrong with it whatsoever.
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KanyesVest
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He's paid insurance for a car he had no intention of driving just to get a No claims bonus then good for him.
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3121
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I’m doing this while at uni, I’ve got a banger I’m insured on and my actual car which I’m a second driver on but only use when I’m not at uni. When my no claims bonus builds up and I leave uni I plan on selling both and buying something nice and new
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Doones
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(Original post by Arran90)
A friend bought a very low insurance group car that was an old banger. He insured himself on the car with no intention to drive it. The car was stored off-road on SORN. As the car was not being driven there was 100% chance that he would not make an insurance claim. A few years later he had built up a no claims bonus for a car that he would actually drive and cut his premium by more than half (according to a comparison website). In the intervening years he had spent most time living outside of Britain.

Is this a dishonest way to reduce the cost of insurance?
What were his annual premiums? If you do this as a new/young driver the premiums would still be prohibitive.
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AngryRedhead
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(Original post by Arran90)
A friend bought a very low insurance group car that was an old banger. He insured himself on the car with no intention to drive it. The car was stored off-road on SORN. As the car was not being driven there was 100% chance that he would not make an insurance claim. A few years later he had built up a no claims bonus for a car that he would actually drive and cut his premium by more than half (according to a comparison website). In the intervening years he had spent most time living outside of Britain.

Is this a dishonest way to reduce the cost of insurance?
There's nothing wrong or illegal about what he did, in fact if you can afford the insurance and the cost of a banger it's a pretty good way to build up your NCB
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Acsel
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(Original post by Arran90)
A few years later he had built up a no claims bonus for a car that he would actually drive and cut his premium by more than half (according to a comparison website).
How much of that cut was due to his no claims and how much was due to him being a few years older?

I feel like the money saved is somewhat outweighed from buying the car and paying insurance but not using it. How much did it actually cost and how much ended up being saved? I feel like it won't be worth the difference and only works in part because your friend was out of the country, assuming it's worth it at all.
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RogerOxon
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(Original post by Arran90)
A friend bought a very low insurance group car that was an old banger. He insured himself on the car with no intention to drive it. The car was stored off-road on SORN. As the car was not being driven there was 100% chance that he would not make an insurance claim. A few years later he had built up a no claims bonus for a car that he would actually drive and cut his premium by more than half (according to a comparison website). In the intervening years he had spent most time living outside of Britain.

Is this a dishonest way to reduce the cost of insurance?
You'd have to check the policy carefully, but I'd be most concerned about not living in the UK. You also need to have been driving regularly for subsequent policy years, IIRC.

There is a risk of a claim - the car could catch fire.
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Doones
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To be 100% clear: the high cost of insurance for a new/young driver is mostly to cover the third party risk not the value of the insured vehicle. New cars are safer, better maintained and treated better by the driver.

Insuring an "old banger" can be more expensive than a new or nearly new car.
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scorpion95
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No it is not a dishonest way to build up the NCB but could have looked at going as a named driver on parents car which might have been cheaper and built up the NCB that way. It would have saved the cost of getting a car and not using it. Not sure all companies will let named drivers do this but Direct Line does.
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maths42
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I have always thought surely people could do this if they know they want to get a car that's more expensive to insure in at least a year but don't want to drive now. What it shows is that the pricing system should change...perhaps the discount should not be as much if you are taking out a policy on a car that's more expensive to insure than the previous one? Perhaps some insurance rates should come down to reflect the fact that you could have done this?

Just a thought though, if this is your plan then surely you should put your mileage estimate down as 0 on the car...is that even possible? If not, maybe put the lowest mileage you can and drive that number of miles for the sake of it!

I am a high mileage driver and have always thought that I should be earning my no-claims bonus faster...if I drive 2/3 times as far as the average driver and don't crash, surely that makes me lower risk? But then perhaps it needs to cut the other way as well...people like me are effectively subsidising people like you. I'm all for exploiting legal loopholes though as long as they don't hurt anyone.
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Doones
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(Original post by maths42)
I have always thought surely people could do this if they know they want to get a car that's more expensive to insure in at least a year but don't want to drive now. What it shows is that the pricing system should change...perhaps the discount should not be as much if you are taking out a policy on a car that's more expensive to insure than the previous one? Perhaps some insurance rates should come down to reflect the fact that you could have done this?

Just a thought though, if this is your plan then surely you should put your mileage estimate down as 0 on the car...is that even possible? If not, maybe put the lowest mileage you can and drive that number of miles for the sake of it!

I am a high mileage driver and have always thought that I should be earning my no-claims bonus faster...if I drive 2/3 times as far as the average driver and don't crash, surely that makes me lower risk? But then perhaps it needs to cut the other way as well...people like me are effectively subsidising people like you. I'm all for exploiting legal loopholes though as long as they don't hurt anyone.
Your high mileage will be an increased risk factor. Your greater experience and lack of claims will be a decreased risk factor.

The insurance companies take it all into account.

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maths42
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(Original post by Doones)
Your high mileage will be an increased risk factor. Your greater experience and lack of claims will be a decreased risk factor.

The insurance companies take it all into account.

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Yes the premium is affected by the mileage but not the terms no claims that you earn - my point is that the insurance companies don't take into account your mileage history when providing a quote, only your estimate for the next year. If person x drives 25000 miles per year for 2 years and person y drives 5000 miles per year for 3 years and neither makes a claim, is it right that y gets a better no claims discount when they did 70% less driving? They might now have the same mileage going forwards.
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Arran90
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(Original post by Doones)
To be 100% clear: the high cost of insurance for a new/young driver is mostly to cover the third party risk not the value of the insured vehicle. New cars are safer, better maintained and treated better by the driver.

Insuring an "old banger" can be more expensive than a new or nearly new car.
Insurance premiums are based on accident statistics so a popular car could end up being more expensive to insure than a rarer car simply because the more popular car is crashed more often.

My insurance premium for a car with a 1.5L engine was lower than that for other people from my area of similar age with cars with 1.2L engines. I assume it was because it was a fairly uncommon model and not one that was popular with a younger age group.

I read somewhere that insurance companies were increasing premiums for many older cars because of potentially weak security but I don't have any more information about this.
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Doones
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(Original post by Arran90)
Insurance premiums are based on accident statistics so a popular car could end up being more expensive to insure than a rarer car simply because the more popular car is crashed more often.

My insurance premium for a car with a 1.5L engine was lower than that for other people from my area of similar age with cars with 1.2L engines. I assume it was because it was a fairly uncommon model and not one that was popular with a younger age group.

I read somewhere that insurance companies were increasing premiums for many older cars because of potentially weak security but I don't have any more information about this.
They also know how many of a particular make & model there are so they look at relative risk, not just absolute.

And yes, less secure cars can be more expensive to insure. That's why they ask if you have a factory fitted alarm/immobiliser, etc.

Edit: you haven't answered my original question.
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Arran90
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(Original post by Doones)
What were his annual premiums? If you do this as a new/young driver the premiums would still be prohibitive.
I don't have the exact figures to hand at the moment but comparison websites were used all the way and I take it in good faith that my friend has made a considerable saving.

The comparison websites revealed that NCB (or the lack of them) counts more than age when it comes to reducing insurance premiums.

There is still a considerable disparity in the price of premiums for a new driver depending on the car. This is to prevent a situation where the cost of insuring a BMW 5 series is only 10% more than a Kia Picanto. A new driver with an unpopular (with the younger generation) car with an engine less than 1L can insured it for less than half the price of a supermini that is popular with the younger generation. They still get the same NCB next year...
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nevershear
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Nope lmao, ya boy played the system fairly and simultaneously proved how stupid insurance premium calculations are.
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maths42
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(Original post by nevershear)
Nope lmao, ya boy played the system fairly and simultaneously proved how stupid insurance premium calculations are.
Exactly, similarly you could have a car for years and never drive it but then your insurance is cheaper just because you have owned the car for longer.

I discovered this as I got a really good quote recently but when I was double checking the details I had accidentally put the year of purchase of the car wrong. When I corrected that, the price went crazy...unbelievable! So you might have owned a car for 10 years, it gets stolen so you buy an identical model and are experienced in driving it, yet you could be paying a lot more for your insurance!
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B3ar93
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No, this is brilliant. He took advantage of a loophole and worked it to his benefit, that’s ideally what most would do if they had the know how.
There’s nothing illegal with it, he paid the insurance.
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maths42
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Imagine if he doesn't protect his no claims bonus, crashes and loses it straight away anyway though when he gets his good car!
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