When the insurance for my hybrid car was coming up for renewal I braced myself for a bigger bill, but I didn’t expect my insurer to refuse to cover it at all.
As a personal finance journalist, I am aware that owners of some luxury cars such as Range Rovers have faced huge hikes in their premiums or been turned down for insurance altogether, due to the risk of theft. But I live with my husband and children in a sleepy market town in Suffolk, rather than the mean streets of Chelsea, and we own a battered second-hand Toyota Auris.
I was therefore surprised when my insurer, LV=, wrote to say it was unable to offer a renewal quote due to a change in its underwriting approach. It explained that it has seen a large increase in the number and cost of claims for “these types of vehicles” and has made the “difficult decision” to stop insuring them.
I tried not to take it personally. LV= was still willing to continue insuring our other car, a recently acquired second-hand electric Renault Zoe – just not our 2015 hybrid, which is powered by a combination of a petrol engine and an electric motor.
The rocketing cost of insurance
Admittedly, theft has proved increasingly painful for insurers. The average price paid for motor insurance has stayed relatively stable so far this year, but shot up 25pc in 2023 compared to the year before.
This was partly driven by rocketing payouts for vehicle theft and spiralling average theft claims, both of which hit record levels in 2023, according to the Association of British Insurers (ABI). The ￡669m paid out for vehicle theft (of and from a vehicle) increased by 23pc compared to the ￡543m paid in 2022.
The rise in theft of both cars and car parts has been driven up by factors such as a shortage of spares and the soaring price of second-hand cars. Both of these issues, it seems, are why I couldn’t renew my policy.
A spokesman for LV= General Insurance said: “We continue to see an increase in theft of cars and trends in theft of high value parts such as catalytic converters, headlights and even steering wheels that organised criminal gangs find very lucrative.
“This is being fuelled by the hi-tech nature of these cars, as well as the perceived value of these components and a general shortage of car parts because of global supply chain disruption.
“Some second-hand cars are highly desirable, being on average over 30pc more expensive than they were two years ago and used by criminals as currency.
“In terms of the Toyota Auris Hybrid specifically, our claims experience with catalytic converter thefts shows they’re at a continually increasing risk of theft and we’re having to make the difficult decision to stop insuring them. Due to the challenge of pricing this risk, it would have had a knock-on effect on every customer’s insurance premium.”
Toyota acknowledges that second-generation Auris Hybrids (2012-18), and second and third-generation Prius models (2004-09 and 2009-16 respectively) have been particular targets for thieves, mainly because of the concentration of precious metals such as rhodium, platinum and palladium used in their catalytic convertors.
As a deterrent, owners can contact their local Toyota or Lexus retailer to get their catalytic converters covertly marked with SmartWater – an invisible but traceable liquid – for free. Toyota has also developed and reduced the price of a “Catloc” device, which is secured around the catalytic converter making it harder to steal.
What to do if an insurer refuses to cover your car
I visited a couple of comparison websites to see if any other insurers were willing to take my money. As Sara Newell, director of insurance at comparison website MoneySuperMarket, said: “Each insurer has its own underwriting guidelines, so if your insurer cannot offer you cover for your hybrid, shop around to find an insurer that meets your needs.”
Our LV= cover for both cars ended on the same day, so it took a while to nail down details for each car and plug in the information for both drivers.
As I slogged through the forms online, I was concerned about how to answer questions about whether we had ever had an insurance policy declined, cancelled, voided or had special terms imposed.
However, according to LV=, I didn’t need to tell another insurer that it had declined my insurance, and it wouldn’t log any records stating that my insurance was declined.
The ABI confirmed that if an insurer decides not to cover a car because the vehicle is outside the insurer’s risk appetite, you would not typically need to declare that you have been refused or declined insurance – but if you are unsure, speak directly to your insurer.
Some factors normally considered relevant to an insurer refusing to cover you, or causing cover to be cancelled or voided, include deliberate fraud, non-disclosure of a conviction, having your driving licence revoked and failure to pay.
It’s important to be honest, as deliberately failing to disclose such information could be insurance fraud, which can carry criminal convictions.
To my great relief, other insurers were still willing to risk insuring our hybrid car.
‘Choosing the right policy is becoming more difficult’
Insurance for both hybrid and electric cars can be more expensive than equivalent petrol or diesel models, partly because the technology is less tried and tested, with higher repair costs and longer repair times. Quotes from Comparethemarket.com for the hybrid started from ￡398, and from ￡464 for the electric car, albeit for the most stripped down “essentials” policies.
Companies have started offering essentials policies as a more affordable alternative, as car insurance premiums have surged – but you ought to read their terms carefully, as some features you might expect may have been taken out.
James Daley, from consumer group and ratings provider Fairer Finance, said: “Many insurance brands that once had a single comprehensive car insurance policy now can have three or four different sub-brands all offering different tiers of cover.
“This brand stacking is designed to ensure they can keep their name at the top of the price comparison charts – but it makes choosing the right policy all the more difficult for consumers.
“There’s no standard definition of an essentials policy, with some insurers stripping out windscreen cover, while others have raised excesses, or removed cover for lost or stolen keys.”
I also tracked down a local insurance broker via the “Find Insurance Service” offered by the British Insurance Brokers’ Association (Biba). Sadly, although the broker in the Ipswich branch of Howden Insurance was chatty and helpful, he couldn’t get close to the prices I had been quoted online.
Armed with a range of separate quotes for each car, I had a go at checking whether I could save by insuring two cars with the same company.
Although LV= was no longer an option for both my cars, other insurers offering “multi car” cover, where more than one car is insured on the same policy, included Admiral, Elephant, Diamond and Aviva.
Alternatively, insurers that offer discounts when taking out additional policies include AXA, Privilege, Direct Line and Churchill. AXA, for example, offers 15pc off your car insurance for the first year when insuring more than one car registered at the same address.
However, the multi-car quote from Aviva, for example, topped ￡1,890 even after the 10pc discount, which was distinctly more than insuring each car separately elsewhere.
In the end, I insured the hybrid directly with Churchill and paid ￡454 for its standard comprehensive cover, which has a lower compulsory excess and fewer exclusions than the “essentials” version. The premium was actually less than the ￡509.75 we paid to cover the car last year.
Much as I would have liked to flounce away from LV=, it offered a good deal to renew cover for our electric car, at ￡406 – including a discount, because at the time the hybrid was still insured with them.
In total, I ended up paying ￡860 to insure both cars – but it took a long time to get there.
