The life you described when you bought the policy, and the one you are living now

A motor policy is not priced against your car. It is priced against a description of a life: who lives at the address and which of them holds a licence, where the car sleeps, what it is used for, how far it goes in a year. The description was true on the day it was given. Then the life moved and the description stayed put.

Nothing in the sequence below is a lie. A child passes a test. A partner moves in. A job changes. A bank card expires. Each is an ordinary event a person tells their family about and does not think to tell an insurer, and each is a change the contract asked to be told about.

What the contract asked for, in two legal systems

The United Kingdom rewrote this duty, and the rewrite is short enough to read. The Consumer Insurance (Disclosure and Representations) Act 2012 puts it in one sentence: «It is the duty of the consumer to take reasonable care not to make a misrepresentation to the insurer.» The same section says that this duty «replaces any duty relating to disclosure or representations by a consumer to an insurer which existed in the same circumstances before this Act applied». The older obligation to volunteer everything an underwriter might have wanted is gone; what is left is an obligation to answer carefully. The Act governs what is said before a contract is entered into or varied, and adds a line that bites at renewal: a failure to comply with the insurer’s request to confirm or amend particulars previously given «is capable of being a misrepresentation». The letter that asks whether anything has changed, answered by not answering, is inside the Act.

Spain writes the same idea with a continuing duty attached. Article 10 of the Ley 50/1980 obliges the policyholder, before the contract concludes, to declare «de acuerdo con el cuestionario que éste le someta, todas las circunstancias por él conocidas que puedan influir en la valoración del riesgo» — and limits that duty in the policyholder’s favour, since there is none where the insurer submits no questionnaire, nor over circumstances the questionnaire did not cover. Article 11 carries the duty forward through the life of the contract: the policyholder must communicate, as soon as possible, changes in the declared circumstances that aggravate the risk and would have kept the insurer from writing the contract or led it to write on more onerous terms.

You answer what you are asked, and while the contract runs you say when the answers stop being true.

A licence arrives in the household

The first event is usually a test passed. The Texas Department of Insurance states the instruction without qualification: «Tell your company when someone in your family starts to drive or turns 16.» It adds that some companies require everyone of driving age who lives with you to be on the policy at all.

The same guide describes what silence buys. If the company learns about the new driver later, it will bill the extra premium that should have been paid, and it «also might deny any claims you have or choose to not renew your policy». The extra premium was always going to be owed. The claim was not.

Someone moves in, and someone moves out

A household is not a family tree, and insurers do not treat it as one. The National Association of Insurance Commissioners is explicit that companies «can base premiums on all insured drivers in your household, including those not related by blood, such as roommates». A partner who moves in, a parent who stays for months after an operation: each is a licence at the address, and the address was one of the things the price was built from.

Movement in the other direction is the half people ignore. Texas’s guidance on the policy documents tells readers to add new drivers and to remove drivers when they move out permanently. A policy still rated for a household that has shrunk is the one error here that costs money every month rather than once.

The move

The address is not a postal detail. It is a rating factor, and the NAIC lists it as one, observing that urban areas usually have more accidents and auto thefts than rural ones: where the car sleeps decides what it is exposed to overnight. A move usually changes the mileage too, and the NAIC lists vehicle use, including annual mileage, among the factors an insurer prices on. Nobody moves house and thinks about their annual mileage. The insurer’s model thinks about very little else.

The car starts earning

A car carrying passengers or parcels for money has stopped being the car the contract describes. The Texas guide places among the things most policies do not cover accidents that happen while driving for a ride-hailing service or delivering food or other items for a fee, and the California Department of Insurance states the mirror image: cover for business use, including driving for a transportation network company, is something you buy. The way in is a purchase rather than a phone call. The phases of an app-based job, and which of them a personal policy is most likely to refuse, are worked through in the companion piece on gig vehicles. Work creeps in without an app too — a car carrying tools between sites has changed its use as surely as one with a courier bag on the seat.

The modification

A modification changes the thing the contract describes, and the honest account stops there rather than predicting what any insurer will do about it. What the regulators say is narrow and useful: California notes that insurance can be bought for extra equipment, naming custom wheels, navigation systems and permanently installed custom equipment, while Texas puts equipment not permanently installed among the things generally not covered. Raise a modification before fitting it, because the equipment is either described and priced or it is not, and which of the two it is was decided when nobody asked.

The payment that failed

A bank card expires and a renewal fails at three in the morning. This is the event with no story behind it, and it removes cover outright rather than reducing it. The NAIC states the trade plainly: pay on time, because some insurers do not accept late payments, and one that does may increase the premium at renewal. Non-payment is also one of the few grounds on which a policy can be ended once issued: California names fraud or material misrepresentation, non-payment of premium, and a substantial increase in the hazard insured against. Two of those three are the subject of this piece.

The consequence outlives the gap. The NAIC lists prior insurance coverage as a rating factor and says most companies charge more where an applicant has no auto insurance when applying. A week without cover is priced for years after the week ends.

For a company, the same events arrive as a list

A business carries every version of this at once, and one more. The Texas guide places a car that does not belong to you but is regularly available to you, such as a company-owned car, among the things a personal policy does not reach — so the employee who assumes their own policy answers for the company van has made the parent’s mistake with a larger number attached. The control is dull: somebody owns the list of who drives what and reconciles it against the policy on a date in the calendar rather than after an incident.

The judgment, kept out of the timeline until here

Every event above is set down as an event, because that is how a reader meets it. Here is what I think about them.

The law, where it has been rewritten recently, is kinder than the folklore. The United Kingdom’s Act gives the insurer a remedy only where it shows that without the misrepresentation it «would not have entered into the contract (or agreed to the variation) at all, or would have done so only on different terms», and it puts on the insurer the burden of showing that a misrepresentation was deliberate or reckless rather than merely careless. For a deliberate or reckless one, Schedule 1 allows the insurer to avoid the contract and refuse all claims. For a careless one the remedy follows what the insurer would have done: avoid and return the premiums where it would have declined the risk, treat the contract as written on different terms where it would have imposed them, and where it would simply have charged more, «reduce proportionately the amount to be paid on a claim».

Spain reaches the same proportion by its own route. Where an aggravation of the risk was not declared and a loss occurs, article 12 provides that «la prestación del asegurador se reducirá proporcionalmente a la diferencia entre la prima convenida y la que se hubiera aplicado de haberse conocido la verdadera entidad del riesgo», and releases the insurer from payment only where the policyholder acted in bad faith.

So both systems separate the forgetful from the dishonest, deliberately. That is the good news and it is thinner than it sounds, because the forgetful policyholder still receives a fraction — a fraction calculated by the party that also decides what it would have charged — and a claim reduced in proportion to a premium nobody was asked for does not rebuild the car. If you disagree with how that arithmetic was done, the supervisor named in the data below is the body that takes the complaint. The NAIC’s advice in the neighbouring situation points the same way: where a policy is cancelled or non-renewed and the explanation does not satisfy you, the state insurance department is where you go.

What nobody can tell you in advance

There is no published list of the changes your insurer treats as material. Materiality is decided by underwriting rules that are the insurer’s own commercial property; they differ between companies selling the identical product on the same street, and they change without notice reaching you. What one insurer’s model treats as relevant is invisible to another’s.

That leaves one move, and it is unglamorous. Tell the insurer, in the plainest words you can manage, naming the change and the date it happened. Then get the answer in writing: California’s guide says to send changes to your agent, broker or insurance company in writing and keep a copy, and the NAIC advises keeping a file of the paperwork, changes to the policy included. An answer given on a telephone call will be reconstructed from memory, by somebody else, on the worst day of your year.