Class of use changes: thousands of drivers risk voiding car insurance

Significant numbers of drivers may be taking a dangerous gamble over the class of use on their car insurance policy.

The way we use our cars has changed a fair bit over the last couple of years, in no small part due to the pandemic.

In fact, because of our reduced use, some insurers voluntarily handed their customers a partial refund to reflect the reduced use.

However, as the world returns to something approaching normal there is a danger that many drivers who reacted to the pandemic in a sensible way are in fact at risk of voiding their car insurance policy.

Class of use

Insurers take all sorts of factors into account when determining the cost of your insurance policy, from your location to your job.

Depending on your answers, the insurer can then determine how ‘risky’ you are as a potential customer, in other words, how likely you are to make a claim on your cover.

A key factor is the ‘class of use’, which is essentially what you use your car for, and you’ll have a few different options.

If you only use the car as a bit of a runaround, for example when visiting friends or picking up the shopping, then you would opt for ‘social, domestic and pleasure.

However, if you are going to use it for the journey to work then you would opt for social, domestic, pleasure and commuting.

And then there is personal business use, which covers all of the above plus any business-related driving, for example, if you need to drive to different sites for your work.

Class of use is obviously going to have a decent bearing on the cost of your policy.

If you’re using your car for commuting or heading off to various meetings for work, then you are more likely to be on the road at busy times and therefore going to be at a higher risk of being caught up in an accident.

By contrast, if you only use the car for social and domestic purposes, you’re less likely to be on the road at busy times and less likely to be involved in an accident.

Changing class

If your usage of the car changes during your policy ‒ for example, you switch jobs and start commuting by public transport rather than driving to the office ‒ then you can contact your insurer to inform them. It may result in your policy dropping in price too.

An awful lot of drivers have been doing just that over the last couple of years, too, as a result of the pandemic. 

According to Admiral, an average of 13,000 customers have changed their class of use on their policy each month since January 2020. Back in March for example almost a massive 16,000 drivers changed the class of use on their vehicle.

Changing times

This was an understandable and in fact a smart, thing to do during the height of the pandemic.

Enormous numbers of people that would normally spend five days a week in the office were instead working from home, and for some of them, that’s still the case. 

As a result, changing the class of use on the car insurance policy was a sensible way not only to have a more relevant car insurance policy, but to save a few quid too.

The trouble is that we aren’t in the height of the pandemic anymore (fingers crossed, anyway) and vast numbers of people who were spending the whole week working from home are no longer doing so.

Sure, they might only be doing a couple of days a week in the office ‒ or perhaps even heading in less frequently ‒ but they are back to commuting into work occasionally, and using their car to do it.

And that means that their car insurance policy may no longer be entirely accurate.

The consequences of getting it wrong

This might seem like a bit of a nothing issue. Honestly, what difference does it make if you happen to use your car for the commute occasionally as well as the weekly trip to Tesco?

However, that would be a real mistake. Having an incorrect class of use on your car insurance is a potentially huge issue.

In fact, if your insurer finds that you have a policy with the wrong class of use, then they can refuse any claim you make, essentially invalidating the cover you’ve paid for. 

This is costly, both in the short term and the long term. The short term hit is that should you be caught up in an accident, you’ll have to foot the bill for the repairs yourself. This can obviously swiftly become very expensive indeed.

But there’s also a long term consequence there. When you take out a new insurance policy, you are asked if you have ever had a policy voided before.

Insurers want to get a sense of how trustworthy you are, and it’s clearly not a great sign if you’ve had a policy cancelled in the past. As a result, you’ll have fewer insurers willing to deal with you, and even if they do cover you, that policy will cost you more.

Realistically, plenty of drivers will be at risk here.

It’s an innocent mistake, but could come with an enormous financial hit that you’ll be counting the cost of for years. As a result, if you have adapted your car insurance policy it’s really important that you check that your cover is still accurate.