Car insurance traps to avoid

Modifications

Insurance may be significantly more expensive for a performance-modified vehicle. The standard definition of a "modification" is any accessory or modification to a vehicle that differs from the car manufacturer's standard specifications for the model and year of manufacture.

Some insurers may interpret any modification as a sign that you are a boy-racer, even if the modification has no effect on safety. We've heard of an example where a customer was told that even a "fancy gear knob" would render his car uninsurable.

We've found that insurers' views on modifications can be related to age, risk and claims history. We know of a case where a 40-something male has no problems insuring his performance-modified Range Rover.

Disclosure is particularly important when it comes to modifications. You must tell your insurer about any vehicle modifications when you're taking out your insurance policy. If you don't, the policy may well be void. And this isn't just about deliberately withholding information. Even if you forget to tell the company something, you may find your insurance useless when you need it most.

Be careful when buying a Japanese imported car, because the car may have been modified. You might have a vehicle that meets the definition of a modified car even if you didn't alter it yourself.

Savings traps

Having no insurance is a false economy. You need protection against the disaster of your car hitting an expensive vehicle. If comprehensive cover is too expensive for your cheap car, go for third party cover (see About car insurance). You're covered if you damage another car and the other driver wants you to pay.

The second trap is saving money by insuring a car in your name when one of your children is the main driver. If the company finds out, they can cancel the cover.

Breaking the law

Driving under the influence of illegal drugs or alcohol is a sure-fire way to void your insurance policy if you have an accident that can be attributed to your intoxication. This does not apply to prescription drugs, unless they carry a clear warning not to drive.

It also may not apply if your intoxication is not the cause of the accident. That is, if you were legally parked and sleeping it off in the back when someone ran into your parked car.

Advise your insurance company of any speeding fines. A one-off minor speeding ticket would not usually affect your policy, but more serious offences could result in an increase in excess or exclusion from your policy.

Breaching the terms of your licence or driving while disqualified may also void your insurance policy, but only if breaching your licence actually caused the damage you're claiming.

Being careless

Not taking adequate care to secure your car against theft can also mean your claim is turned down. This can range from leaving your car unlocked with your keys in the ignition, to leaving expensive items like a laptop visible inside a locked car.