What happens if my car insurance is cancelled due to non-disclosure?
When you sign up for a new car insurance policy you have a legal obligation to give your provider a full and honest account of the information they require to accurately evaluate the insurance risk you represent when you get behind the wheel. But what are the implications if you fail to disclosure something important to your insurer?
If you fail to disclose something important (a ‘material fact’) your policy could be cancelled, which would not only mean you wouldn’t be able to claim on your policy in the event of an accident, but if you drove the vehicle without taking out a new policy you’d also be ‘driving without insurance’, which is a very serious motoring offence.
What is non-disclosure?
Non-disclosure is the term used to describe a situation where a customer has failed to declare a relevant fact when applying for, or renewing, a car insurance policy.
The Financial Ombudsman Service states that insurance contracts are based on “utmost good faith”, which means all parties signing up to the agreement are making a commitment to deal with one another in a full and frank way.
If you have failed to provide all the information your provider asks for, or have provided inaccurate or misleading information, you could be judged to have breached these terms through non-disclosure.
Why might a driver fail to disclose relevant information?
It probably goes without saying that failing to disclose to your new insurance provider that you claimed on your insurance after a car accident last year could result in cheaper insurance premiums this year, since your new insurer wouldn’t be in a position to take into account your true claims history when calculating your premium.
However, even something as simple as listing ‘nurse’ under the occupation section of the insurance form when you’re currently unemployed could result in cheaper insurance quotes, because insurance providers use the policyholder’s occupation as one of the factors in their insurance premium calculations.
And even failing to inform your existing insurance provider that you’ve moved to a new house could be seen as non-disclosure, because your location is a major factor when calculating (or adjusting) car insurance premiums.
Of course, while non-disclosure could have a monetary benefit in each of these scenarios, it could be argued that the first two are more likely to be deliberate than the third. Failing to inform your existing provider that you’ve moved house after you’ve taken out a fully-comprehensive, third party, fire and theft or third-party only policy could well be a foolish mistake rather than a deliberate attempt to mislead.
In fact, when it comes to car insurance there are actually four different types of non-disclosure.
The different types of car insurance non-disclosure
Deliberately withholding information from the insurance provider, or intentionally providing them with false information, is the most blatant type of misrepresentation, but there are also three other types of non-disclosure.
The four types are:
- Deliberate non-disclosure, where the customer has provided information they know to be untrue.
- Reckless non-disclosure, where the customer has taken an irresponsible action such as letting someone else complete their insurance application for them.
- Inadvertent non-disclosure, where the customer fails to answer a question fully but has no intention to mislead.
- Innocent non-disclosure, which could happen if the insurer has asked a question that is ambiguous or not sufficiently clear.
Non-disclosure is closely linked to misrepresentation, the term used to describe the broader issue of insurance customers making incorrect statements.
Vital information you will be required to disclose
In order to complete a full and accurate assessment of your potential risk as a customer, car insurance companies need to have access to a wide range of information about you, your driving record and your claims history.
To begin with, insurers will want to know essential facts such as:
- Your age
- Where you live
- Your occupation
- The car you drive
- How long you’ve held your licence
Going beyond these fundamentals, though, providers will also use the following factors when deciding whether or not to insure you – and at what price:
- Your claims history (potentially going back as far as five years)
- Health conditions that could affect your driving
- Whether or not your car has been modified in any way
- Any past insurance cancellations
- Any unspent criminal convictions
Providing incorrect information for any of these questions could be viewed as non-disclosure, which is why it’s vital that every detail a policyholder provides is honest and accurate.
The risks of non-disclosure
Cancellation due to non-disclosure is much more than a logistical complication – it’s a very serious outcome that could have a very long-lasting impact.
If you have your car insurance policy cancelled due to non-disclosure you will face two immediate issues:
- You will no longer be able to drive your car, because to do so would mean you’d be driving without insurance
- You will find it much more difficult (and much more expensive) to take out a replacement car insurance policy, specifically because your cancelled policy means you now represent a much higher insurance risk to new insurers.
However, beyond those two immediate risks of non-disclosure, drivers who have had their policies cancelled face a much more long-term risk – the cancelled policy will never disappear from their record, and they will have an obligation to disclose it to any future insurance provider that asks. In fact, failing to disclose the cancelled policy when asked about it would be classed as insurance fraud.
Finding alternative insurance after a policy is cancelled
It will be more difficult and costly to find car insurance if you have had a policy cancelled in the past, particularly if the cancellation was the result of non-disclosure or misrepresentation.
And since the cancelled policy won’t disappear from your record after five years like a motoring conviction or penalty points would do, it’s likely that you will continue to be turned down by certain insurance providers for the rest of your life.
However, by using a car insurance comparison site like Quotezone.co.uk to compare providers you should still be able to find a range of companies that are willing to insure you each year, although the premiums they will quote will likely be higher than average.
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