Car insurance firm charged me £3,000 after I crashed my car – the small print trap that drivers need to beware of

TEENAGER Yasmin Hose was distraught when she crashed her car last January.

The 18-year-old, from West Sussex, was driving down the motorway to her job at Gatwick Airport when her tyre blew out, causing her to crash into the central barrier.

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The air hostess felt lucky to be alive, but her Vauxhall Corsa was less fortunate and was swifty written off.

But Yasmin’s good fortune ran out when she was asked to cough up £3,000 to pay her remaining insurance premiums for the year by her insurer, 1st Central.

Yasmin immediately made a claim on her insurance policy after her crash, which she had been paying around £450 a month for since November 2023.

When she spoke to the insurer on the phone, it said she would be able to cancel her policy fee-free if her case was closed as a no-fault claim, and she got the impression she wouldn’t have to pay another penny.

But after all the excesses were taken off, the insurer said it would only pay out £570.

An excess is an amount you agree to pay yourself in the event you make a claim on your policy. Paying a higher excess can lower your insurance premiums and vice versa.

While investigating Yasmin’s case, the police had ruled it a “freak accident” and said she couldn’t have prevented it.

So, Yasmin had assumed her insurance case would be closed as a no-fault claim.

However, a no-fault claim has to involve a third party so the insurer can claim on that person’s policy instead, and in Yasmin’s case no one else was liable for what happened.

Then in March her claim was closed and she was told to cough up the remaining £3,000 of premiums she owed for her year-long policy with 1st Central – despite doing nothing wrong.

Devastated and confused, that’s when Yasmin contacted The Sun for advice on how to proceed.

When we spoke with Yasmin and her mother, we found buried in her policy’s small print that she could be liable for the remaining premiums in the event she crashed her car.

But Yasmin was sure when she had first talked to 1st Central on the phone, it hadn’t been clear that this would apply to her case.

Key terms in insurance documents, including anything related to how much you will pay, need to be “bold, prominent, fair and transparent” under the Consumer Rights Act.

When we initially spoke to 1st Central, it was adamant that its terms were clear and “standard across the industry”, which is true, as customers who pay monthly for their insurance typically have to pay for the full year whether they claim or not.

However, after we pushed the firm on its miscommunication around closing the claim, the insurer finally reviewed call transcripts and admitted to Yasmin that it had not been clear enough with her.

It has now paid her £100 compensation for the confusion and is reviewing its policy documents to ensure information about premiums is more clear for future customers.

The firm has also now found that it closed Yasmin’s claim too quickly – the firm told her it should have kept her claim open for at least nine months – so it has agreed to reopen her case and see whether she is due any further payout.

“Thank you so much for all your help with this,” Yasmin’s mother Felicity said.

Our Squeeze Team has now won back over £173,000 for readers.

Can insurers really ask you to pay the rest of your premiums?

When you take out a car insurance policy, you can either choose to pay for the whole year up front or to pay in monthly instalments.

Yasmin had chosen to pay monthly, but her contract with the insurer was still for the whole year, so she had to keep paying even though she no longer had a car to insure.

And if you pay for the year up-front, you are not refunded any of your premiums if you make a claim.

The only exception is if the claim is closed as a “no-fault” case where a third party is liable.

Yasmin’s case was unusual as she was deemed completely not at fault, yet the incident was also no one else’s fault.

Motoring disputes expert Scott Dixon explained: “When you pay car insurance monthly, you are entering into a 12-month loan agreement with your insurer for a one-year insurance policy. 

“Whenever a claim is made mid-term and no other party is involved, you will be liable to pay for the full year’s premium as you have entered into a one-year contract for insurance cover, excluding no-fault claims.

“No fault claims are usually upheld when your car has been damaged by a third party.”

Unfortunately, making claim can also increase your future insurance premiums for new policies, even where it isn’t your fault.

“This is because insurance company algorithms cite that you are more likely to make a claim even if you are not at fault,” Mr Dixon said.