Insurers put squeeze on offenders

Drivers with convictions or penalty points will pay a hefty price long after their licence is clean, writes Caroline Madden.

Most drivers are aware that a drink-driving conviction results in disqualification from driving, a hefty fine, and in extreme cases even a spell behind bars. But as well as legal repercussions, motorists should bear in mind that a conviction will transform them into highly undesirable candidates for motor insurance.

Almost 29,000 people were convicted for drink-driving between 2000 and the end of 2005. And although 2006 crime statistics have not yet been released by the Garda, the introduction of random breath testing last July is likely to have further increased the number of drivers over the blood/alcohol limit being apprehended.

When these drivers regain their licence and decide to take up their legal entitlement to drive again, they will quickly discover that insurance companies who touted their business in the past now slam the door in their face. As soon as a driver's chequered past is discovered, actuaries get jittery and insurers batten down the hatches.

Legally, drivers can have penalty points arising from driving offences wiped off their licence after three years, but from an insurance perspective the stain on a person's driving history can last a lot longer. Some insurers, such as Hibernian, will consider quoting drivers if they haven't been convicted of a serious driving offence within the last five years or disqualified from driving within the last 10 years.

In the eyes of some insurers, however, the slate can never be wiped clean. "Some insurers on the market have quite an open question on the proposal form which asks, 'have you ever had a conviction?' And they don't put a time limit on it, they don't say 'in the last three years or five years', and if you answer [ yes to] that question some insurers will never insure you," says Pádraig Lynch of insureme.ie.

Although individual insurers have the right to refuse cover, the motor insurance industry as a whole has agreed that anyone looking for car insurance must be given at least one quote. The Declined Cases Committee in the Irish Insurance Federation (IIF) will consider a person's case if they have been refused quotes (in writing) for motor insurance from at least three companies. The first company approached will normally be required to quote the person for insurance, but if the driver had a policy from a different company within the previous three years it will be asked to provide a quote instead.

Even when applicants have cleared this hurdle, they will get a nasty shock when they finally receive a quote.

In the most extreme cases they could even be looking at a five-figure sum - as much as €10,000 - due to the "loading" which will be applied to the premium.

The magnitude of this loading depends on many factors, such as the severity of the offence (for example, how far they were over the blood/alcohol limit), how long the individual has been off the road, whether this is their first offence, and so on.

"It would vary from company to company," says Mr Lynch. "One company may have 100 per cent, another company may go as high as 200-300 per cent loaded."

"Certainly drink-driving will attract a big loading in the early years, when they're coming back on the road," says Michael Kemp, IIF chief executive. "It's one of the knock-on effects - not only do you have the sanction of losing your licence to deal with, but also a loading when you do get back on the road. But you'd have to say that's only fair. Insurance is about trying to charge a premium that reflects the risk."

Frank Farrell of the IIF's insurance information service explains that the loading reduces each year, but again this varies depending on the circumstances. Mr Farrell says he would expect the loading to be removed completely after five years, however, so long as the driver has built up a good record during that time.

However, an alternative does exist. Just as "sub-prime" lenders have sprung up in the mortgage market, targeting borrowers with poor credit histories, specialist companies have arrived in the insurance market to cater for drivers having difficulty getting quotes.

Mr Lynch says that specialist insurers such as ARB Underwriters and St Paul are definitely worth looking into.

"With these specialist insurers there's a bit more choice there for the consumer . . . whereas before you would have been tied to the last insurer you were with," he says. "There's no doubt about it, if you've got a conviction you're going to be worse off and you're going to pay more, but compared to what you would have been paying five years ago it may not be as bad now."

ARB offers its Top Choice product to "non-standard" drivers who are finding it difficult to get insured due to endorsements or penalty points on their licence. "It's a product that's tailor-made for each individual case," a spokeswoman for the company says.

"We have quite a detailed proposal form. We would tend to look for a lot more documentation than most standard insurance companies look for . . . There is no restriction on cover, but they will pay an additional premium because of the fact that they've had an endorsement on their licence."

So what magnitude of loading can a "non-standard" driver expect? "There's no real rating structure as there would be with standard insurance, it's all down to how many years back on the road, what their age profile is, why they were off the road in the first place - there are so many different variables," she says.

In order to avoid exorbitant premiums, individuals may be tempted to keep their drink-driving skeletons locked in the closet, and hope that the company never finds out the complete and unabridged version of their driving history. But by doing so they risk invalidating their policy.

"Like any form of insurance, motor insurance is a contract of utmost good faith. We rely on the person taking the insurance out to answer the questions honestly," says Mr Kemp. He says that hiding the facts is a false economy, as the truth usually comes out anyway, for example at the claims stage, or if a driving conviction is reported in the local press.

"You're better off being upfront about it because there's always the danger that it will come out in the wash anyway at a later stage," he says. "You could find a situation where the insurance company cancels the policy from inception in a serious case, or they might refuse to renew the policy."

Drivers with convictions

DO:

•Consult a broker, as specialist underwriters such as St Paul's and ARB only deal through broker channels.

•Use the free Insurance Information Service provided by the Irish Insurance Federation (IIF) if you have three or more companies which have refused to quote you. It is your statutory right to get motor insurance from at least one provider. The declined cases committee of the IIF will consider your case.

•Keep full details of all refusals you receive from insurers.

•Be careful when filling out a motor insurance proposal form: does it ask for details of convictions or disqualification from driving in the last five years, or ever?

•Give details of any penalty points received.

•Consider Quinn Direct - It only takes account of convictions in the last five years when reviewing a risk.

DON'T:

•Be surprised if a "loading" of 100 per cent or more is added to your premium in your first year back on the road.

•Bother surfing the web for quotes. You can't get cover over the internet if you have a previous driving conviction.

•Conceal any information relating to your driving history - it may invalidate your cover. Insurers can check Insurance Link, an anti-fraud claims database, for evidence of prior claims made. They also keep a close eye on reports in local newspapers of driving convictions.