Losing your job could increase your motor premiums by 400%, and you might not even be able to get cover at all. That's the shock claim of Money Mail, which commissioned Money Supermarket to examine the issue.
At first glance, the figures make little sense as people on low incomes might be expected to drive less often given the rising cost of motoring. However, insurers appear to believe four factors come into play when somebody loses their job:
- they are more likely to drive during the day rather than just commuting;
- they are less likely to pay for regular repairs and servicing and thus increase the chances of a crash;
- they are more likely to be tempted to make fraudulent claims;
- and they are more likely to be unable to make scheduled premium payments.
Another significant issue is that because insurers group working people by job when assessing risk. Unemployed people are left in a much larger, more diverse pool that doesn't reflect risk as accurately.
One insurer said his firm would continue offering insurance to existing customers who become unemployed by basing premiums on their previous job, but would not accept new customers who were out of work. That could make it much harder for jobless people to shop around to renew deals.