Sue Handley's car insurance was coming up for renewal and she'd been talking amongst her friends, some of who were paying quite a lot less than her. She didn't really want to change insurers – she'd been with them for the last few years and it's so much easier to just let it run on without the hassle of form-filling no claims details. However, maybe it was time to check if there was a way to save some money. A quick look on-line soon found an insurer with the right cover and a substantial saving in premium.

Having had no reason for complaint and really good service from her current insurer, she decided to give them a ring and see if they could match the quote. During the quote she answered a few questions and when two speeding fines, which she hadn't told them about at the time, were disclosed, she got quite a shock. The insurer informed Sue that there would be figure of over 500 pounds to pay as this would have been the cost of additional premiums over the past four years had she declared them at the time.

Both the speeding tickets were for exceeding the limit by 5mph on a road with a 30mph limit. The company said that had she told them of the offences, she would have paid this cost in additional premiums to cover the perceived extra risk in offering Sue insurance cover.

In reply, Sue Handley said she was aware of the fact that you are supposed to tell your insurers about motoring convictions but as these were both dealt with via a fixed penalty fine and not an appearance in court, she did not think it necessary. She said she was sorry for the mistake, but that it hadn't been done on purpose.

The insurers then said: "Under an insurance rule known as "utmost good faith", we rely on the customer to disclose complete information about themselves and their driving history. We don't believe the term 'conviction' is unclear. We do however appreciate perhaps this is something we should look at further." They also explained that in fairness to other clients, who openly tell them of convictions and endorsements when taking out new insurance and of changes at renewal date, any waiver of this premium should not be allowable.

A lawyer who specializes in insurance, however, was of the opinion that the insurers had no basis in law to charge for an insurance contract which had expired. They say that the insurer should only have the right to take action if a claim had been made in the period in question. Apparently “The basic legal position is that non-disclosure of a material fact does not automatically avoid the contract of insurance. It gives insurers a right to choose either to avoid the contract or to affirm it.”

Therefore they didn't think that the insurers were entitled to claim in retrospect for the previous years. They felt that each year of the policy was a separate contract and basically these particular years were in the past.

The insurer eventually waived the additional charge. They accepted that Sue Handley had been a loyal client and had paid them a not inconsiderable amount in premiums over the time she was with them. However they stated "We need to know about all motoring convictions and we charge a higher premium to those with them because as a group, policyholders with motoring convictions result in a considerably worse claims experience.”

The position would have been very different if a claim had been made. Which just goes to show the importance of being open with your insurer, regarding any relevant facts which could alter the insurance, not just when taking out a new policy, but each year, at renewal time.

Get on-line to find the most up to date advice and the very best quotes for your car insurance. An on-line broker is only a click away.