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FIVE THINGS YOU’RE DOING THAT ARE INVALIDATING YOUR CAR INSURANCE

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CAR INSURANCE

Car insurance is a legal requirement for motorists, but many drivers may be unknowingly voiding their policy.

Failing to update your circumstances or providing false information, whether intentionally or not, could lead to your insurer refusing to pay out or cancelling your policy. In the worst-case scenario, you may be liable to be prosecuted for fraud.

To help motorists avoid any issues with insurance, experts at online car parts provider CarParts4Less have outlined five common mistakes that can invalidate your policy.

  1. Car modifications

Nearly half (47%) of Brits have modified their car in some way, with over a third (37%) spending £500 or more souping up their motors*, but failing to notify your insurer about any changes to your vehicle could void your policy.

There are two ways that car modifications can affect your insurance premium: if they increase the likelihood of an accident (performance upgrades), or if they increase the likelihood of theft (cosmetic upgrades or tech add-ons, such as a soundsystem).

Always ensure that you inform your provider about any changes to the vehicle, as this will allow your insurer to assess the validity of your policy.

  1. ‘Fronting’ 

Insurance for young drivers often costs more than groups deemed less of a risk. One way some motorists try and get around the higher premiums is by having a low-risk driver, such as a parent or partner, named as the main policyholder and adding the real motorist as a named driver.

However, if you get caught ‘fronting’, as this tactic is known, your policy will immediately be cancelled, and any claims denied. These cases are often taken to court and are classed as insurance fraud, with outcomes including fines of up to £5,000 and six points on your license.

  1. Not updating your address

Car insurance premiums can vary depending on the postcode, as some areas have higher rates of thefts and break-ins. It can be tempting to put down your home address as somewhere different to where your car stays every night; for example, your parents’ house while you are at university. However, if you do so, your insurer can refuse to pay out for any claims made at your actual main living location.

Many companies have investigative departments (called a special investigations unit, or SUI) dedicated to making sure information on your insurance and claims is correct, so while you may think you can get away with not updating your address, you’ll likely be caught when you make a claim.

  1. Not reporting accidents

Many motorists don’t see the point of notifying their insurers about small bumps and scrapes. However, even if you don’t intend to claim, it is important to inform your insurance provider about any damage, as not doing so is a breach of your policy.

This protects you in the event that the other driver changes their mind and decides to claim. It also ensures damage is accounted for if you do need to claim for future incidents, as damage which is inconsistent with a claim may mean that you are denied.

  1. Commuting

There are three types of car usage that insurance covers: social only, social and commuting, and business

These different policies provide different extents of coverage, and using your car outside of this usage will mean that you’re unable to claim. For example, social usage does not cover your car when commuting, so you will be unable to claim for any incidents while travelling to or from work.

A CarParts4Less spokesperson said: “While it may be tempting to bend the rules to pay for a cheaper policy, it’s never worth it, and will often lead to you paying substantially more in the long run.

“It’s important to always read the terms and conditions of your car insurance policy, to ensure that you have not accidentally invalidated the policy. Keep your insurance provider up to date with any change of circumstances, regardless of whether or not you think it’s relevant. It’s better to be safe than sorry.”

To find out how to legally reduce your car insurance costs, visit https://www.carparts4less.co.uk/blog/10-tips-to-reduce-your-car-insurance-premium

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DOGECOIN MADNESS

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by Nathalie Janson, Associate Professor at NEOMA Business School

 

After the unstoppable increase of Bitcoin (BTC) since January – it added 10 000$ to its price every month since January reaching 60 000$ in April 2021  – it is now the turn of the Dogecoin to be the next cryptofrenzy.

This crypto created in three hours by Billy Markus as a joke to make fun of the Bitcoin community back in 2013 had no specific use except federating crypto geeks sharing the same sense of humor. Its capitalization quickly reached 60 million USD back then. This is why until Tuesday, April 13th 2021, its price was closed to 0 since cryptos value derives from their usefulness.

The Dogecoin belongs to the family of Altcoins using proof of stake to validate transactions – more flexible and fast compare to Bitcoin and Ether based on proof of work – but essentially not as decentralized and secured.  So far Dogecoin has mainly been used for  tipping creators of content or more interestingly to noble causes. These include raising funds for the bobsleigh Jamaïcan team to send them to the Winter Olympic Games in 2014, paying back victims of Dogecoin hack in the early days after its creation,  and raising funds to provide access to drinkable water in Africa.

 

Dogecoin… a billionaire maker joke

How comes the DogeCoin price surged in such irrational manner? Is this move another proof of market madness? A sign that we might be close to the next burst of the crypto bubble? Who knows? … Why is it so difficult to understand the pricing dynamic of cryptocurrencies?  You might think that what we experienced is the paroxysm of futility. In a week, some Dogecoin holders become billionaires, the price of the Dodge coin increasing from almost 0 to 43 cents at its highest. How mad that sounds? Similar to what happened to Gamestop, we are dealing with a community with a strong identity – the Dogecoin joined by new members like Snickers – the sweet bar and more importantly by Elon Musk – who wants to set a record and claiming April 20th being DogeDay with the clear goal to push Dogecoin up to $1. They are encouraging each other to buy more of the coins. Given the limited size of the market dominated by “whales” – five “whales” are said to control 40% of the market – the increase in purchases of Dogecoin leads to significant rise in price given the low liquidity.

The Dogecoin case is an emblematic case showing how subjective value is in economics. Indeed, like Bitcoin, the price of Dogecoin only depends on its acceptance that in itself depends on the size of its network that suddenly increased.

Why now? First, Elon Musk started to show his interest in the Dogecoins by tweeting about it. Why does Elon Musk opinion matter? Because he symbolizes the success story of a man who is a visionary. After all, if Elon Musk invests in Bitcoin and supports Dogecoin it must be for a reason, and he may be right like he has been right about the industrialization of electric cars as the success of the Tesla demonstrates. He performs a role similar to leading investors in traditional financial markets like Warren Buffet.

Secondly, the Coinbase initial public offering contributed to a rally in the cryptocurrencies market, with no exception for the Dogecoin. Over the week-end, the major cryptocurrencies – BTC and Ethereum dropped for technical reasons due to a sharp decrease in the hash rate after an electricity shortage in the Xinjang province in China. When that happens, it usually benefits altcoins.

More broadly speaking, the crypto market is frenetic since the beginning of the year. This frenzy is a symptom of a global economy that is still suffering from severe restrictions in some activities but at the same time is also experimenting acceleration in others. Combined with overgenerous monetary policy feeding liquidity in search of profitability away from traditional markets because of low interest rates and over rated stock markets, this is a perfect combination for investors to try anything new to boost their portfolio return if you add on the top of that, growing concerns about the return of inflation in the US.

In this context how long will the Dogecoin rally last? This essentially relies on the determination of its fans to support it but after a while, it will need to be more than a symbol!

 

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Wealth Management

WHY COMPLICATED INCOME STRUCTURES SHOULDN’T PREVENT HIGH NET WORTH INDIVIDUALS FROM INVESTING IN PROPERTY

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Mike Coates, Founder and CEO of Commercial Expert

 

An investor’s preference is usually to split their investment across different funds, in a varied and balanced way.  Research has shown that the most popular investments made by high-net-worth individuals (HNWIs) vary between stocks, shares, hedge funds, private equity, and real estates (residential and commercial properties).  The allocation of funds is predominantly governed by taxes, goals and individual preferences.

However, in the past decade, HNWIs have encountered barriers to accessing finance because of the way lenders approve loans.

 

The barriers facing HNWIs

In the aftermath of the GFC of 2008, a notable trend to emerge was lenders seeking to minimise the level of risk to which they were prepared to expose themselves. This was achieved through adopting a more stringent selection criteria when it came to assessing an individual’s financial situation before approving a loan.

As a result of this change in lending behaviour, securing finance has ultimately become more difficult across the board, including, ironically, HNWIs, whom you might expect would be unaffected. The reason HNWIs might struggle is because the new lending culture favours those with straightforward finances, and a regular income.

However, for HNWIs, this is not usually the case.  For example, a HNWI’s portfolio could be split across various asset classes and jurisdictions; their income may be irregular or derived abroad (including off-shore tax-havens); many HNWIs are expats and may be receiving income in different currencies.  When these factors are considered, it’s easy to see why HNWIs might be classed as ‘high-risk’ in the eyes of some lenders.  As a result, many HNWIs have struggled to secure funding or even a credit card.

Consequently, for HNWIs looking to take advantage of the current low borrowing rates, as well as the tax relief by securing finance, they will be better off finding a reputable financial adviser or broker who will take a more holistic view when it comes to assessing their financial situation.

Financial advisers have established relationships with a wide portfolio of lenders who aren’t just the regular high street banks and building societies. There are certain lenders who are used to dealing with clients that have huge property portfolios and are experienced in calculating the stress levels on existing portfolios. They are able to use different assessment criteria in order to approve loans, even where applicants have a low debt service coverage ratio (DSCR).  They may also request to see your SA302 (self-assessment tax returns for the last 4 years), tax overviews and accounts in order to gain a deeper understanding of your income structure. Where people have deferred tax, this also gets taken into consideration.  At the end of the day, it’s about having your foot in the door with the right lenders, that helps to determine your ability to secure a mortgage as an HNWI.

 

Reasons to invest in property

Compared to private equity and hedge funds, real estate investment is by far the least risky option. Real estate is safe and is set to lead us to recovery following the aftermath of Covid-19.

What we witnessed during the global pandemic was that contrary to early predictions, rental prices remained relatively stable and property prices rocketed. The UK house price index, published in January 2021, revealed that the average house price increased by 7.5% year-on-year. i   Initially, the stamp duty tax relief may have been attributed to the increase, however, as the tax relief deadline approaches, there doesn’t appear to be any sign of a slow-down.  This indicates that other factors are underpinning the rise. Many believe that lockdown has forced people to reassess their priorities, with an increasing number of people desiring more generous living and outdoor space in areas away from cities.

 

What properties to invest in

As it currently stands, almost 60% of HNWIs have revealed that they invest in real estate. ii The properties are usually where they themselves reside, or in “offshore” areas where they enjoy going on holiday.  If properties are situated in tourist hotspots with nearby beaches or mountains, they are often rented out to tourists during peak holiday seasons and available for their own holiday use during off-peak times.

 

Final thoughts

If you want to invest in properties either in the UK or abroad, don’t be deterred by previous failed attempts at securing finance. It is a good move to appoint a specialist commercial finance broker with access to the whole of market, who can undertake all the research required, and recommend a suitable lender and product.

There are only a handful of lenders who are equipped to deal with HNWIs, with complex income structures, therefore it’s crucial to make sure you’re speaking with the right people.

 

References:

i https://moneytothemasses.com/owning-a-home/house-prices-2/what-is-going-to-happen-to-uk-house-prices

ii https://www.fool.com/millionacres/real-estate-investing/articles/what-are-high-net-worth-individuals-investing-in-now/

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