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Guardian Money/Insurance

Top Gear gets bottom marks for insurance advice

James May's advice that parents should "front" insurance policies for their children is way off track, says Jill Insley
Petrolheads may revere the Top Gear team as gods on all things engine-related, but when it comes to personal finance one thing is clear: they are not to be trusted.
In Sunday's episode they raised the problems faced by young drivers, teenage males in particular, when trying to buy car insurance. We have no issue with that: it's a estimable cause to take up. Even if they can persuade an insurer to cover them, the cost of a policy for box-fresh drivers is likely to be in the thousands of pounds.
But one of the methods the team suggested for getting round this problem could land young drivers and their parents in very hot water: fronting. This is the illegal practice of a parent taking out a policy in their name for their child's car and adding their child (the real main driver) as a named driver in order to keep the cost down.
In the programme presenter James May said: "It soon dawned on us that the only realistic way of getting covered when you are 17 is by going on your parents' insurance. So we got back on the phones pretending to be dad."
The advice has caused insurance companies and brokers to blow a gasket. According to Hayley Parsons, chief executive of Gocompare.com: "While few people would take Clarkson's suggestion that a sex change could help 17 year old boys halve their premiums seriously, fronting is a common fraud and we would urge parents to avoid the practice as, if found out, the consequences could be severe."
Luckily Richard Hammond is more up to speed than May when it comes to insurance. He pointed out that drivers who do put themselves on their parent's insurance and then crash will find themselves without cover if the insurance company discovers the truth.
In fact, the insurer has the right to cancel the policy, making it even more difficult and expensive to buy a policy in the future. And if it declines a claim in these circumstances, the young driver could be treated as uninsured and could be fined hundreds of pounds and receive six penalty points (an automatic ban for new drivers).
It's not the first time one of the Top Gear team has veered off track into the world of personal finance. Last year Jeremy Clarkson admitted he was wrong to brand the scandal of lost CDs containing the personal data of millions of Britons a "storm in a teacup" after falling victim to an internet scam.
After printing his bank details in a newspaper to make the point that his money would be safe and the idea of identity theft was a sham, he discovered they had been used to set up a £500 direct debit to a charity.
For those who find Clarkson and his views a tad irritating, he then came out with what must be among the most refreshing words ever to be read in the Sunday Times: "The bank cannot find out who did this because of the Data Protection Act and they cannot stop it from happening again. I was wrong and I have been punished for my mistake."
guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
Refund drama over West End no-show

Dirty Dancing ticket unused because of illness – but insurance company won't pay out
In April, I had a £78 ticket to see Dirty Dancing in London but missed the show as I developed vomiting and diarrhoea. I had paid £2 extra for insurance for "unexpected illness" but the insurance company, Allianz, has refused my claim as I did not send in a doctor's certificate. Obviously, on the day I was in no fit state to leave the house to attend the surgery. My doctor says he is unable to issue a certificate because he did not see me when I was ill. LB, West Drayton, west London
Unfortunately you had the wrong kind of illness. Allianz says it demands proof to ensure that only genuinely ill people claim for tickets they haven't used and, if it removed the requirement, claims would rise substantially. It says it understands your predicament – you couldn't leave the house while you were ill but, once it had passed, you were perfectly well – but suggests you could have asked the doctor to visit or called for a telephone consultation.
I hope you never need to put this advice to the test.
• Email Margaret Dibben at your.problems@observer.co.uk or write to Margaret Dibben, Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU and include a telephone number. Do not enclose SAEs or original documents. Letters are selected for publication and we cannot give personal replies. The newspaper accepts no legal responsibility for advice.
- Consumer affairs
- Insurance
guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
NatWest has change of heart over tragedy mortgage payout

Bank makes amends for mistake over insurance policy
My fiancé and I took out an interest-only mortgage for £115,000 with NatWest in August 2007, with insurance for what I thought was life, accident, sickness and unemployment cover.
Last March, my fiancé was killed in a road accident caused by a drunk driver. I phoned NatWest to claim but the adviser had trouble locating the insurance and promised to call back that day. I heard nothing so phoned again three days later when I was told we had, in fact, applied for mortgage payment protection insurance. This covered only accident, sickness and accidental death, with a one-off payment of £20,000.
Though we had signed for it, the bank had not set up the policy. It had changed our mortgage number during the application and failed to transfer the mandate to the new application. It had not set up a direct debit and we had missed 19 payments, amounting to £349.
The bank admitted its error, offered to pay half those premiums and backdate the policy so that it would pay out. I asked for this in writing, with details of the insurance because I believed we had taken out life insurance. I phoned three more times before anything arrived and I still haven't had proof that we did not apply for life insurance.
On my wages I am £300 a month short of the amount I need for household bills, including £612 for the mortgage. The house is worth less than we paid, and I can't afford to repair the boiler, but I am desperate to keep it as we worked so hard to build up our home. I don't know where to turn to get this resolved. AT, Liverpool
There are some circumstances in which bank employees should pull out all the stops for customers and yours is one. Instead of doing all they could to shoulder some of your burden, NatWest staff added to your distress by leaving you to chase them for phone calls and the promised paperwork. Eventually the bank sent the key facts sheet, but for your mortgage, not insurance policy.
Your problem has been reviewed at a senior level in the bank. First, NatWest now won't ask you for any missing premiums for the accidental death policy. It is sending you a cheque for £20,000 immediately. But that won't put much of a dent in your mortgage. The bank still cannot find any paperwork to prove you bought life insurance but it has carefully reviewed your mortgage application and decided that, in view of its other mistake, on the balance of probability, you did intend doing so and it will respond as though you had. This means your outstanding mortgage is being paid off in full and you can stay in your home. Credit is due to the bank for a compassionate response in the end.
• Email Margaret Dibben at your.problems@observer.co.uk or write to Margaret Dibben, Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU and include a telephone number. Do not enclose SAEs or original documents. Letters are selected for publication and we cannot give personal replies. The newspaper accepts no legal responsibility for advice.
guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
Budget airlines 'ignore' EU rule on insurance

Low-cost airlines such as Easyjet are ignoring an EU ruling that they cannot automatically add travel insurance when people buy tickets.
Last November, the EU introduced legislation requiring airlines to include all taxes and charges in their published ticket prices. The ruling says: "It will not be possible to impose additional charges on passengers without their express consent (opt-in)." This opt-in includes saying yes to travel insurance.
However, Easyjet is still making passengers who buy tickets on its website opt out of taking travel insurance. Even when they opt out, they are asked to confirm it.
A report from consumer magazine Which? Holiday will confirm the Observer's findings. It has also discovered that three other airlines are ignoring the EU ruling. Jet2 and Monarch both automatically add travel insurance policies, it says, costing between £7 and £10.49 per passenger. Cancellation insurance for flights returning on the same day is added automatically by Air Berlin, costing €12 (£10.50). Consumers have to untick a box to opt out.
An Easyjet spokesman said the airline would change its website to conform with the opt-in guidelines over the next few months.
In April, Ryanair complied with the EU ruling, removing insurance opt-out from its ticket booking process.
National Express Coaches also requires passengers to opt out of insurance when they buy their tickets, otherwise £1 cover is added.
"With airlines still opting people into insurance, consumers could unwittingly buy a product which is of no use to them," said Lorna Cowan, editor of Which? Holiday.
guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
Death benefit plans aren't good for you

If you want to put yourself between a rock and a hard place, a funeral plan is the policy for you
I returned to England in 1989, after taking early retirement from teaching.
I saw a Cornhill advertisement which guaranteed a lump sum, on death, that would let the family cope with funeral expenses. In my case, I would pay £8 per month, for a £1,009 payout – enough then for a funeral.
Exactly 20 years later, I have paid in £1,920 and will only get £1,130. I am 81. What should I do? AC, Lancashire
These so-called funeral plans are regularly advertised on daytime TV from companies such as Axa, Legal & General and Liverpool Victoria, usually with "mature" celebrities endorsing the product and emphasising that there are no medical questions.
But unless you are in pretty bad (not really bad) health, they're a waste of time. You pay until you die – miss one premium and the plan is worthless – and the sum assured does not change for inflation nor increases for investment gains. So you need to die quite quickly after you take out the plan, but not too soon because plans pay only a small sum based on premiums paid if you die in the first two years.
In your case, you paid for your death benefit in about 12 years (less really, because Cornhill would have invested the money). You could also have gained interest on it.
The product catches people between the rock of continuing to pour money into the plan and the hard place of wasting what is paid in. There is no easy answer other than to keel over.
It may sound flippant, but this is a product which few independent advisers would recommend.
We welcome letters but regret we cannot answer individually. Email: capital.letters@guardian.co.uk Please include a daytime phone number
guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds

News feed

Know Your Money Insurance

Cheaper car cover rather than no insurance at all
Getting their hands on cheaper car insurance may leave Britons forking out further down the line. But done correctly, bagging a cheaper policy may save drivers hundreds of pounds.
Why having no breakdown cover could freeze your finances
Britons who are penny pinching may turn to their car insurance or breakdown cover to find ways to cut costs. But this could be a false economy, leaving people forking out hundreds of pounds further down the line.
Does loyalty pay?
With financial services providers battling for a greater share of the market, is it worth switching or staying put?
Car insurance needed for hire cars
Anyone planning to hire a car this summer should check their car insurance policies, it has been suggested.
Bike cover cheaper than car insurance
Car insurance is typically more expensive than that for motorcycles, according to the AA.

News feed

Reuters Banking and Financial

U.S. Marines launch key operation in south Afghanistan
SORKHDOZ, Afghanistan (Reuters) - Thousands of U.S. Marines stormed deep into Taliban territory in an Afghan valley on Thursday, marking the start of a major new effort by the Obama administration to regain the initiative in the war.
U.S. job losses spike in June, dampen recovery hopes
WASHINGTON (Reuters) - U.S. employers cut far more jobs than expected last month and the unemployment rate hit 9.5 percent, the highest in nearly 26 years, underscoring the likelihood of a long, slow recovery from recession.
Vice President Biden visits Baghdad
BAGHDAD (Reuters) - U.S. Vice President Joe Biden made a previously unannounced visit to Baghdad on Thursday to meet Iraqi leaders and U.S. military commanders just days after American troops withdrew from Iraqi towns and city centers.
California turns to "IOUs" amid budget impasse
SAN FRANCISCO (Reuters) - As California marked its second day of a new fiscal year without a budget agreement, the state government moved ahead on Thursday to issue billions of dollars in "IOUs" in order to avoid a cash crisis.
U.S. marshals seize Madoffs' $7 million NY apartment
NEW YORK (Reuters) - U.S. marshals seized the luxury $7 million New York City penthouse apartment of imprisoned fraudster Bernard Madoff and his wife, Ruth, officials said on Thursday.