Ireland’s ‘sick’ car insurance system: A scrape involving two drivers who know each other turns ‘nasty’

If you are in any doubt that the car insurance sector in Ireland is utterly dysfunctional to the point that it sometimes seems to be actively working against the interest of its paying customers, the experience of a reader who we will call Claire should set you straight.

In the middle of January, Claire was attempting to park and accidentally scraped another car.

There was nobody in the other car but Claire contacted the owner and offered to pay to repair the small scrape on her door and silently cursed at the small scrape on her left rear passenger handle.

“What struck me was the first thing she [the other driver] said to me as she took photos of my insurance disc was: ‘I’m not going to screw you.’ I thought this was a red flag but presumed because we knew each other that there would be a straightforward settling of the issue.”

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There wasn’t.

A day after this most minor of incidents, Claire “received a text from the other driver stating that it cost €260 to repair the scrape and I was in agreement that that quote sounded reasonable and in keeping with the minimal damage”.

The other driver had more to say. She was looking for an additional €349.99 for a new child car seat.

Claire “absolutely” objected to this. She points out that her two children were in her car when the scrape happened “and if I thought there was any remote chance that the car seats were impacted I would have replaced my own children’s seats, never mind hers. As I stated each and every time I contacted the insurance company, there would have been more impact on her child’s car seat if she had banged her own door shut.”

[ Tell us your story: Have you been let down by your car insurer following an incident?  ]

A few days passed and Claire spoke to the other driver on the phone and explained that while she was happy to pay the €260 for the scrape, she was not going to buy a new car seat.

The other driver said “that it was a health and safety issue and that she had spoken to [a shop] and was told she needed a new car seat. I advised her that [the shop] would not be the experts as they are retailers in the business of selling car seats and that I would seek advice from the Road Safety Authority and phone her back.”

So Claire called the RSA and was told “that unless there was an actual accident/impact, then there is no need to automatically replace any of the children’s car seats. I confirmed that there was no impact per se, rather my car scraped her paintwork in first gear...given that I was attempting to park. I phoned the other driver back but she didn’t pick up”.

Claire then called her insurance company “to proactively give them a heads up in case the other driver would not call me back and just went to them directly. I discussed the incident for 27 minutes and 25 seconds explaining how I clipped a parked car while parking myself and strongly objecting to the parked car’s owner claim for a baby car seat. I asked that I be contacted to show any assessor the minimum damage to my own car, that the claim for €260 for paintwork was in keeping with the light scrape and that all that was in contention was whether she’d be automatically entitled to a new car seat, again stating that the RSA had said a replacement was all dependent on the size of the accident and the impact incurred. I was assured that all would be investigated by an independent assessor, and I would be advised accordingly.”

A few days later she received a mail from her insurance company “simply confirming that they had paid €1,272.18 out to the complainant on my behalf. I had no contact from the assessor in the interim period. I was absolutely horrified that my previous call for close to half an hour with the insurance company had been completely ignored. I immediately called and was on the phone for 14 minutes and 15 seconds refuting the claim that they had settled on my behalf as bogus. Given I had a text from the injured party quoting €260 for paintwork and an email from the insurance company that said she was paid €1,272.18, she has now been overpaid €1,000″.

Claire logged a complaint with the company on the basis that no assessor contacted her or checked her car or asked for any back-up. She also complained that she had not been given the opportunity to settle the case directly. “On my first call I’d been told that I would have the opportunity to proceed/withdraw the claim at any stage, so I was waiting on the outcome and contact of the independent assessor,” she writes.

She heard nothing back for a few days until a mail came from her insurer to say that the claim had been settled but for a higher amount of €1,602.13. The updated mail explained that the higher amount was because the cost of the car seat had been factored into the settlement.

Claire says the insurance company seems to “have totally disregarded my initial call and paid out on a disputed claim without my authorisation. I was told the system said ‘I accepted liability’ ... but as per my calls, that was for paintwork only, to the tune of €260. There was zero impact on the car to justify a car seat replacement and as previously mentioned on both calls, both my children were in the car and, if they genuinely needed to have their seats replaced, I would not hesitate to do so”.

She adds: “I honestly am shocked that the insurance company did not stop her. Essentially, I have been penalised for being proactive and honest – reporting the incident in advance of any claim. And the other driver has benefited hugely...My no-claims bonus will be lost and my insurance premium will be raised as a result of this nasty turn of events.”

Insurance companies for years have been overpaying settlements as a way of de-risking their book and getting them closed. Once they can charge the punter they don’t care

She wants insurance companies to “stop taking the easy way out and paying out ... it’s a win-win for them ... little to no time investigating/liaising with me, their client, and then lock me in at a higher rate for the foreseeable future”.

Our first port of call was Insurance Ireland, the umbrella group that represents the sector, to see if it had a view on a story which, we believe, crystallises much that is wrong with the sector and offers a glimpse into why many people are paying over the odds for cover. It did not respond to our request for a comment.

We also contacted Conor Faughnan, formerly of the AA and current chief executive of the RIAC motoring club, who for a long time has been calling for the motor insurance sector in Ireland to be reformed and recast to work more in the interests of consumers.

He is not slow in expressing his view on this story, which, he says, is a “good example of a sick system”.

He notes that it was “simple accident” unfortunately involving “an insurance company that has no real reason to care and, at the end of the food chain, an ordinary mum, who has to fork over extra money”.

He says that when you buy insurance, “you sign away your right to negotiate. That’s part of the contract, even when it frustrates people. The insurance company is allowed to settle a case and pay out on it, even if you feel that they are wrong. This is an example of an insurance company that is complacently settling an exaggerated case. It is infuriating because the poor customer will be hit severely at renewal when her record shows a claim against her. This will both up her price and affect her ability to shop around. She is the big loser in this”.

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But ultimately, says Faughnan, the insurance company loses as well. “While they are within their rights, they are causing unfair collateral damage to the customer by paying an exaggerated claim for damage that did not happen. I am sorry to say that this complacency is typical.

“No doubt they thought that for such a small amount of money it was less hassle to pay it off. Despite the perception, an insurance company isn’t really incentivised to reduce the cost of claims. They are just fine with expensive claims provided that they can cost them accurately and charge the punter, and once they can make sure that they are not falling behind other insurers.

“This is actually really important at the moment in cases of personal injury. Insurance companies for years have been overpaying settlements as a way of de-risking their book and getting them closed. Once they can charge the punter, they don’t care but actually we really need them to stick to their guns and fight exaggerated claims more forcefully.”

Have your say: Have you been let down by your car insurer following an incident?