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Clarifying the car insurance claims process: non-fault and fault claims

5 minutes

After a fire in Liverpool destroyed all the cars in a 1,600-capacity car park, LV= waived any affected customers' excess, because the claims were judged to be 'non-fault' claims.

But this raises the question: why would they have been 'fault' claims in the first place if the car owners aren't to blame?

  • No insurance complications for LV= customers affected by Liverpool ECHO fire
  • Customers' claims considered to be 'non-fault' claims
  • LV= expert explains difference between 'non-fault' and 'fault' claims

'Fault' and 'non-fault' car claims can be tricky to get your head around

In the early hours of New Year's Day, a fire broke out in the Liverpool ECHO Arena car park, destroying all the cars inside.

Around 1,400 vehicles were destroyed, as the car park wasn't completely full. LV= recognised that registering the claims of their car insurance customers who were affected as 'non-fault' rather than 'fault' claims would help them during a difficult period.

LV= waived the excess of these customers and let them keep their no claim discount, if they had one. 

The incident raised an important question, one that many customers understandably struggle to get to grips with: if the fire started by accident, why would any claims have been 'fault' claims in the first place?

Andy Davies, LV= Head of Pricing Strategy Delivery & Risk, helps us get to the bottom of it.



What is a 'non-fault' claim?

A 'non-fault' claim is a claim where one of the following is true:

  • The claim has not led to the customer's insurer making any payments
  • All payments made by the insurer have been recovered from a third party and/or their insurer
'So if you're in a car accident and the other driver accepts the blame, and their insurer pays out for any damage, it is a 'non-fault' claim,' explains Andy.



What is a 'fault' claim?

Any other claim on your car insurance is a 'fault' claim, meaning that your insurer has had to pay out on it.

'The important thing to remember is that a 'fault' claim and actually being to blame aren't the same thing,' Andy says. 'Your car could be damaged in a way outside your control, but if your insurer has to pay out, it is still a 'fault' claim.'

That means that the following are not sufficient reasons for a claim to be 'non-fault':

  • The claim is not caused by the customer or their actions
  • The customer feels (rightly or wrongly) the claim was unavoidable
For example, if another car hits your car while it's parked on the street, and the other driver drives off without leaving their details, your claim would be a 'fault' claim.



Could my premiums increase after a 'non-fault' claim?

Even if you have a 'non-fault' claim, your insurance premiums may increase.

Statistically, drivers who have made a claim on their car insurance, whether it was 'non-fault' or 'fault', are more likely to make another claim in the future than drivers who have never made a claim.

'Insurers aren't implying that people who have a claim are worse drivers because of it, just that they are more likely to be involved in an incident where we as the insurer could end up incurring a cost,' says Andy.

By increasing premiums for drivers with a previous claim, insurers are charging those who are more likely to cost the insurer further down the line with another claim. This means that prices for the majority of drivers can stay lower. Drivers who have made a claim, meanwhile, benefit from their costs being spread out across a larger group of people.



How do insurers assess car insurance costs?

Insurance underwriters consider a number of rating factors when it comes to adjusting and assessing car insurance costs:

  • The vehicle's age, value and performance
  • The availability and cost of replacement parts
  • Any security features that could prevent theft or damage
  • When and how far the driver travels in the car 
  • The claims and convictions history of the driver
  • Where the driver lives
  • The age and experience of the driver
  • Changes in legislation and the rising cost of claims overall
'Underwriters use all their experience and the evidence at their disposal to set insurance premiums,' says Andy.

'Your premiums are based on a number of factors that our analysis has revealed could increase a driver's chance of making a claim.'