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i didnt say that i dont think so
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Don't get pranged by the policy shunt

Don't get pranged by the policy shunt
>By Josephine Cumbo
>Published: June 24 2005 15:33 | Last updated: June 24 2005 15:33

Motorists who don't check the small print of their insurance policies
could be in for a nasty shock as insurers take away key elements of their
cover, potentially leaving them unwittingly uninsured.

The government's clampdown on uninsured driving is prompting insurers
to withdraw a long-standing extension, which allows third-party
policyholders to drive vehicles they don't own.

This occurs as insurers also eliminate the 14-day "grace" period from
policies, also prompted by concerns over uninsured driving.

However, a quirk of the new insurance regulation could mean that these
changes will be overlooked by thousands of motorists.

Norwich Union Direct, which insures one in seven cars in the UK, has
become the latest insurer to withdraw its Driving Other Cars extension. Its
competitors are expected to follow suit as the government acts on the
recommendations of an independent report into un-insured driving, said to
add £30 per year to the premiums of honest motorists.

Norwich says the Driving Other Cars extension is contributing to the
problem of uninsured drivers as the cover is often unintentionally misused.

The extension is only intended to apply to emergency situations, but
some younger motorists were using it to drive more powerful cars belonging
to their friends, says Norwich.

This week, the AA said it would consider the issue with the panel of
22 insurers for which it brokers.

Norwich says it is communicating this change, which it has described
as key, through letters to existing policyholders.

However, one Norwich Union Direct policyholder has accused the insurer
of "burying the bad news" in
>a 13-page booklet which came with her renewal proposal.

Peta Rogers of Horsham says she was astounded that Norwich had placed
this vital information about her policy after a lengthier section on changes
to courtesy cars and hire cars.

"It seems to me that an office of your size and standing should have
the courage to risk the loss of business that may ensue from spelling out in
clear and simple terms what you have done," Rogers wrote in a letter to

"Now that small print is not allowed, please don't just bury bad news
in mountains of verbiage. The consequences, to me and others involved, of
finding myself underinsured after a serious accident are just too awful to

Norwich strongly denies that it tried to bury bad news. It said it had
a raft of changes to its policies, including arrangements for courtesy car
and legal cover, to communicate to its thousands of policyholders.

"We can't possibly know what is more important to some customers and
not others," says Liz Kennett, a senior official with Norwich.

"We highlighted in the renewal letter that there had been changes to
the policy and that is why you need to read the booklet which was titled
'Important Notice to Policyholders'.

"I don't see how much more we can possibly do," she adds.

Consumer groups say Rogers' case highlights a quirk of general
insurance regulation, which allows companies to treat new policies and
renewals differently in terms of the small print in their documents.

The Financial Services Authority, which began regulating the sector in
January, requires those selling new cover to provide user-friendly policy
summaries which carry the Key Facts brand.

Documents with the Key Facts logo are supposed to help the consumer
buy the right cover by listing salient points about the policy in a brief
format, reducing the risk of significant exclusions or limitations being

But this demand of "less is more" was dropped for renewals, due to
industry pressure. For the thousands of policyholders renewing each year,
their insurers are only required to send them a statement setting out
changes to their cover from the previous year. As in the case of Rogers, the
small print in these statements can run to a dozen pages.

"One of the dangers is that with such long documents (such as that
Rogers' received), you may miss something which is pertinent to you," says
Mike Naylor, principal researcher with Which?, the consumer rights group.

"Many consumers think they have better protection under regulation,
but the onus is still on them to check their policy."

The Financial Services Consumer Panel, the independent voice for
consumers of financial services, this week said Rogers' case added to their
concerns, already raised with the FSA, about the fair treatment of

Some within the industry agree that more needs to be done to alert
consumers to current and future changes affecting their policies. This is a
particular issue since general insurance products can be sold without

"Whether they have cover for driving other cars is not something
people always ask when they buy a policy," says Graeme Trudgill of the
British Insurance Brokers Association.

"But if they are buying without advice, for example directly over the
internet, they need to check if they have this cover. Otherwise they could
find themselves driving uninsured and that is a very serious offence."

Trudgill says this case also highlights the need for policyholders to
check for other significant exclusions. He says some think they are covered
for driving in Europe when they are not, or often don't know their policy
does not cover their commute to and from work.

The FSA says the Key Facts concept is essential to helping consumers
get a fair deal and is scrutinising the industry for poor examples of policy

However, some are not convinced that even this
>will prevent consumers missing important changes to their policies,

such as the removal of driving other cars cover.

"Until companies are more upfront about what's in their policies, the
only way you can be sure whether the product you are buying is suitable is
to read the full policy document," says Naylor.


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