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.
There are three main types of motor insurance policies.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Most insurance companies may offer additional discounts if:
Knowing what to do if you are involved in an accident can save lives and also make the claims process easier.
Follow these steps:
Remember that each company will have its own procedures governing the claims process. If you have any questions, call your insurer or insurance intermediary.
The insurance company or intermediary will chase the report and collect it themselves.
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.
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.
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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.