A Guide: Making Insurance Simple

Why do I need to buy motor insurance?

The law requires you to have motor insurance before you are permitted to drive a car on the road. All motorists are required to be insured against their legal liability for injuries caused to third parties (including passengers) and for damage caused to third parties resulting from the use of a vehicle on a road. It is an offence to drive your car or allow others to drive it without insurance. The basic level of motor insurance which you must have is Third Party Cover.

Are there different types of motor insurance policies?

There are three main types of motor insurance policies.

Third Party Only

This policy gives you the minimum cover required by the law. It covers your liability towards third parties which arise by your causing them injury or property damage out of the use of your vehicle. This includes cover for passengers. This policy offers no cover for damage to your own vehicle.

Third Party, Fire and Theft

This policy covers your liability towards third parties as in (1) above plus any damage to your car resulting from a fire or from theft.

Comprehensive

This policy is sometimes called "full cover" because besides covering your liability towards third parties for injury or property damage, it also covers your own car against any kind of accidental damage even if it is caused through your own fault.

You must purchase at least category (1) of motor insurance to drive a car. However you are free to choose whether you want to buy more cover than the minimum. You may even purchase additional benefits to top up your comprehensive policy such as cover for a replacement car. Ask your insurer or insurance intermediary for details of possible extensions.

As regards motorbikes, please note that insurers will normally only provide cover on a third party only basis.

What determines the price of my motor insurance policy?

The cost and availability of motor insurance cover will be greatly influenced by:

The type of vehicle and its age and condition

If you require cover beyond Third Party Only, the type, state and age of your vehicle are important as they will affect the availability of spare parts and the level of repair costs. A powerful, expensive vehicle will cost more in terms of spare parts and repairs.

The age of the driver/s

This is not just your age but that of any person you allow to drive your car. Statistics and experience have shown that mature drivers have fewer accidents than young drivers below the age of 25.

Your past accident record

A clean driving record will obviously result in a lower premium than that for a person with a record of accidents or serious traffic violations.

The nature of use of the car

Social, domestic and pleasure purposes, business purposes, commercial purposes, car hire, etc. will heavily influence the premiums and even whether your insurance company will be prepared to quote you or not.

How do I decide on the value of my vehicle?

The insurance company or insurance intermediary will be able to provide advice on this aspect, on the basis of guidebooks which are published annually by the relevant bodies/organisations. The value decided upon will serve as a guide for the market value of your car and hence the value referred to in the event of a claim. You should change the value of your vehicle at each renewal unless you have Third Party Only cover. This reduction in value will reduce your premium, unless, of course, you already pay the minimum premium. When you receive your renewal notice, ask your insurer or insurance intermediary for the revised value of your vehicle. Give clear instructions to lower the value accordingly, and when you receive the new certificate of insurance, check the value shown.

If you keep the value of your vehicle at an amount higher than that indicated, the insurer will still pay your claim on the basis of the market value, not on the higher amount you declared on your insurance proposal. It is important that you understand that the indications of value provided by any appropriate guides shows the values of vehicles on the basis of certain assumptions particularly those regarding the condition of the vehicle and its mileage. The value of your vehicle is subject to constant changes throughout the year and will be affected by various factors some of which are the mileage, the level of care and maintenance exercised by the owner, the supply and demand for the particular vehicle and the particular model and specifications.

Will my motor insurance policy still cover me if an accident happens when someone else is driving my car?

When you purchase motor insurance you may choose to restrict driving to yourself and certain specified people such as your husband/wife or people beyond a certain age. In return you will get a discount. These are normally called Authorised Drivers. If you choose to allow other drivers under the age of 25 (this is normally the 'threshold' age) to drive your car, your premium will increase substantially. When buying insurance make sure you restrict the cover to the people you need to allow to drive your car. Remember their accident record and age will influence your premium. Do not allow anyone outside this category to drive your car.

DRINK DRIVING
Drink driving convictions are taken very seriously by insurers. Most policies would have a restriction in respect of driving under the influence of alcohol, drugs or any other illegal substance. As a result, damage to one's vehicle may not be recoverable and an insurer may recover from the insured claims for damages paid to third parties in such circumstances. Besides this, convicted drivers returning to the roads may face difficulty in obtaining insurance and may have to pay premium increases. The level of cover may be reduced - for example from comprehensive down to third party fire and theft. These higher premiums and cover restrictions may well last for a number of years.

What is an "Excess"?

This is the amount of each claim that you pay yourself. It is also called self-insurance. Normally you are subject to an excess which can range between £50 and £750 for own damage claims (the excess does not apply to third party liability claims). If the driver is below the age of 25 the excess could be higher. Similarly, for claims under the theft section the excess could be rather high. You may also choose to retain a higher excess yourself in return for a discount.

Therefore, if you cause damage to your own vehicle amounting to £3,000 and your excess is £500, you pay £500 and your insurer pays the balance of £2,500.

What is a "No Claims Discount"?

Policyholders with a claim free record normally qualify for a premium discount. Scales do vary but usually range from 20% for one claim free year up to 60% or more after four or five years. This discount is not usually lost if you change your vehicle or your insurer. If you choose to change your insurer, the new insurer will need to obtain written confirmation from your previous insurer regarding the No Claims Discount (NCD) you are entitled to. There are various discount schemes offered such as Protected No Claims Discount or Careful Drivers Discount. Ask your insurer or insurance intermediary for details of these discounts.

Will I lose my No Claims Discount when I claim?

If you have the minimum cover of Third Party Only and you make a claim you will lose your No Claims Discount (NCD). However, if you have a higher level of cover such as Third Party Fire & Theft or Comprehensive, then you will only lose part of your NCD if you make one claim. This is because most insurers today offer a "step-back" scale. Normally your NCD will step back by two years instead of going back to zero.

Will I still lose my No Claims Discount if I am not to blame for an accident?

Yes you will normally lose it when you make the claim. However, if the insurers of the third party admit the blame and agree to compensate you, your NCD will be restored when your insurer recovers the amounts he has paid you from the third party insurers.

What other discounts can I get?

Most insurance companies may offer additional discounts if:

  • you limit the authorised drivers;
  • you choose to increase the excess;
  • you insure more than one vehicle with the same insurer;
  • you have an approved car alarm installed in your vehicle; and/or
  • you also have a household or other type of insurance with the same insurer.

MATURE DRIVERS
People between the age of 50 and 65 years are less likely to drive aggressively or too fast. That's the reason why certain insurance companies may also offer discounts to drivers in this age bracket.

What should I do if I am involved in an accident?

Knowing what to do if you are involved in an accident can save lives and also make the claims process easier.

  • Stop your car and find out if anyone is injured. If there are casualties call an ambulance immediately. Tell them how many people are injured and, if possible, the types of injuries sustained.
  • If you are involved in a collision where people are injured or when government property is involved, you should call the police. A police presence may not be required, however, in small collisions where the above scenarios have not taken place.
  • Try to protect the accident scene. Take reasonable steps to protect your car from further damage, such as putting on hazard lights and calling a tow truck if necessary.
    • Remain calm, be prudent and do not blame the other party nor admit liability in any circumstance. That will be decided at a later stage by your insurer or legal adviser.
  • If you have a camera in your car, take photographs of the accident. It is wise to keep a disposable camera in your glove compartment. These disposable cameras are quite cheap and they can come in handy if you want to take photos of the accident. Take photos from different angles. Give a copy of the photos to your claims handler.
  • If it is a front to rear collision, or as some call it "bumper to bumper", make sure you fill in the relevant form at the place of the accident. The form used in most European countries is called the European Accident Statement (EAS). In Gibraltar, however, the EAS form is normally only issued to vehicles exposed in Spain (a 'Gibraltar Form' is issued instead). You should always keep a copy of a claim form in your car. If you don't have one, get it from your insurer or insurance intermediary. As regards the European Accident Statement, if there are two vehicles involved in the accident you only need to complete one form. If there are more vehicles you will need more forms. Make sure you fill in the correct details, and describe the accident as accurately as possible. Do not forget to do a rough sketch of the accident there and then. Sign your section of the form. Then ensure that the other party fills in his part correctly and signs it. Check his vehicle registration plate number and all other possible details. All parts must be completed in ink to ensure that no information is easily changed after you leave each other. The form is in duplicate, so you should each take a copy and give it to your insurer or insurance intermediary. Keep a photocopy for your own records.
  • If the accident is not front to rear, it may be best to call the police, even if no-one is injured, as you will need their report and sketch. Make notes. Keep a pad and pencil in your glove compartment. Write down:
    • the names and addresses of all drivers and passengers involved in the accident
    • check if the driver is the owner of the car
    • licence plate numbers
    • make and model of each car
    • driver/s' licence number/s
    • the name of the insurer/s of the other vehicle/s
    • names, telephone numbers and addresses of witnesses
    • names and badge numbers of police officers or other emergency personnel
  • If you run into an unattended vehicle or object, try to find the owner. If you cannot, leave a note with your name, address and phone number. Record the details of the accident.

How do I file a claim?

Follow these steps:

  • Call your insurance representative as soon as possible after the accident, regardless of who you consider to be at fault and the size of the loss. If the accident happens during a week-end, contact your insurer first thing on Monday morning. You may eventually decide not to make a claim under your insurance policy, but you must still notify them immediately.
  • If it was a front to rear collision submit the copy of the front to rear collision form (EAS – if applicable) to your insurer. Give copies of any photos you may have taken at the accident scene.
  • If it was not a front to rear collision you will be required to complete a claim form. Fill in the details as accurately as possible and ask your insurer or insurance intermediary for any assistance you may need to complete the form. Sign it and keep a copy. Give copies of any photos you may have taken at the accident scene. Give any additional information you collected at the accident scene that was not requested on the claim form. Ask your insurer or insurance intermediary how to proceed and what other forms or documents will be needed to support your claim. Keep a copy of everything you give to your insurer or insurance intermediary.
  • Ask your insurer or insurance intermediary the following questions:
    • Does my policy contain a time limit for filing claims and submitting bills?
    • Is there a time limit for resolving claim disputes?
    • If I need to submit additional information, is there a time limit?
    • When can I expect the insurance company to contact me?
    • Do I need to get repair estimates for the damage to my car?
    • Will my policy pay for a rental car while my car is being repaired? If so, how much?

Remember that each company will have its own procedures governing the claims process. If you have any questions, call your insurer or insurance intermediary.

Who will obtain the police report?

The insurance company or intermediary will chase the report and collect it themselves.

What should I do if it is clear I am not to blame for an accident?

If you have purchased a Comprehensive motor policy, you may claim under your own policy and avoid the hassle of chasing third parties. This means you will have to pay the excess and lose your No Claims Discount. Your insurer will then proceed to recover the amounts paid to you from the guilty party or his insurers. Once they achieve this, your insurers will refund you in full. Therefore your No Claims Discount will be restored and your excess recovered.

If you have Third Party Only or Third Party Fire & Theft cover and are involved in an accident which is the fault of the third party, your insurer can only offer you advice on how you may proceed. Alternatively, you may contact a lawyer.

What types of car repair parts can be used to repair my car?

It is important to keep in mind that the purpose of the motor insurance policy is one of indemnity, that is the insurer must put you back in the same financial situation you enjoyed prior to the loss - no better, no worse. The insurer does not simply check the sum insured and pay you an amount subject to the limit of the sum insured. Your loss must be evaluated and made good. Therefore it is important that the age of your vehicle and its condition are carefully assessed. As previously mentioned, the value of the vehicle is the market value.

When it comes to replacing parts insurers will normally use original equipment manufacturer (OEM) parts if the vehicle is less than 5 years old and well maintained. For older vehicles, using new OEM parts would result in an enhancement in the condition of your vehicle and result in putting you in a better situation than that which existed before the loss. Therefore imitation parts or non-OEM parts may be used. These may vary in quality and standard and you should clearly discuss their origin and brand with the surveyor and insurer before starting repairs.

What should I do if I am having trouble settling my claim?

Click here for more information.

Questions to ask your insurance representative about motor insurance

To give you some more help, here are some basic questions you should ask your insurance intermediary before you buy your motor insurance. Please note, the questions provided are very general; so we advise that you also ask your insurance representative questions that are specific to your policy.

  1. If I am involved in an accident tomorrow, what kind of cover can I expect from my motor insurance policy?
  2. What optional cover is available
  3. I drive an old car. Do I need comprehensive cover?
  4. Who is covered by my motor policy?
  5. What is my excess? Do you recommend my increasing it?
  6. Would I be able to hire a car while my car is being repaired following an accident?
  7. I have changed my insurer. Does this mean I will lose my No Claims Discount?
  8. What service should I expect if I am insured on a Third Party Only or Third Party Fire and Theft basis?
  9. I use my car only for a Sunday drive. Does this affect my motor insurance?
  10. I am buying a new car. Will the type of car I choose affect my insurance rates?
  11. Does it make a difference as to what insurance I should get if I buy a new car or a second hand one?
  12. What insurance companies did you contact on my behalf? (insurance brokers or agents only)
  13. Bonus question - What can I do to lower my premium?

Some Further Advice

Road Rage
Increasingly crowded roads and traffic congestion cause some drivers to lose control and become extremely aggressive.
If you encounter aggressive drivers:

  • do not challenge them;
  • stay as far away as possible;
  • you may want to take down their licence plate number and report their behaviour to the police so they will not hurt themselves or someone else.