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To
what extent is motor insurance compulsory?
Taking out insurance is
usually a matter of choice, but this is not the case when it comes to cars
and other road vehicles. It is an offence to use a car on public roads
without having insurance to cover your legal liabilities if you injure
others. You simply are compelled by the law to have this minimum level of
cover, which is built into your fuel cost. This minimum level of cover is
compulsory under the Road Traffic Act.
What types of motor
policy can I choose from?
There are three broad
types:
- Third party, which covers
your legal liability if you damage someone else’s physical property
(walls, vehicles, gates etc.) due to a driving accident.
- Third party, Fire and
Theft offers third party cover and adds on two useful pieces of cover
- fire damage to and theft of your car, including damage caused by a
theft or attempted theft.
- A fully comprehensive
policy includes Third Party, Fire and Theft and in addition will pay
for damage to your own vehicle in the event of an accident. There are
many extras, too, for example it will also give you cover when you
drive other people's cars - useful if you borrow someone's car and
their insurance does not cover you.
How do I decide which
policy to go for?
Fully comprehensive
cover is obviously better as it provides you with the most cover, but for
some drivers it can be very expensive. You have to take account of what
your car is worth, Priceless will give you this figure. This is the
maximum we would pay out if the car were stolen or became a write-off,
taking account of any excess you'd have to pay. Decide whether you'd
prefer to risk losing that payout - or pay the extra cost for a more
expensive policy.
What is Retail Value
Insurance?
Retail value insurance, which
is what Priceless provides, insures your vehicle for the current price
that you can purchase your vehicle for from a show room floor. The benefit
here is that annually as the value of your vehicle changes (usually
decreases), so to does your sum insured (associated decrease) and so to
your premium (associated decreases, saving you money). At the same
time, if your vehicle is stolen or written off, you will be paid out what
is costs to replace your vehicle with a similar vehicle at the time of
loss, unlike other insurance policies where you will be left with a large
gap between the pay out amount and actual replacement cost. Always
remember to keep your excess in mind.
What is a Claim Free
Group?
A Claim Free Group (CFG) or "bonus" is a discount that you get for not claiming for
a whole year. At the end of the first year you would have a CFG 1. If you
continue not to claim in successive years this rating will climb to CFG 10
(industry norm is only CFG5). Each CFG has an additional discount on the
premium you would have to pay to enjoy the same level of cover, this means
you don't have to pay the full premium if you don't claim. Priceless gives
the discount to new customers who have a claims-free record with another
company.
A no-claims discount is not a
no-fault discount. You could lose the discount if you claim even when an
accident is the fault of another driver.
There seem to be big
differences in car insurance premiums. Why do they vary so much?
A whole range of
factors affects what you pay. Five in particular are important:
- First there's you the
driver - your age, your job, your driving record.
- Secondly there's the car.
The higher the value of the vehicle, the higher the premium. High
performance vehicles are also more expensive to insure than their
stock standard equivalents.
- Thirdly, there's the
location of the car. You'll pay more if you keep the car in a
high-crime area.
- Fourthly, what you use the
car for. You'll pay more if, for example, you plan to use the car for
business delivery purposes.
- Finally, there is the
excess structure that you choose. The higher the excess the lower the
premiums, you can save up to 40% on premium depending on the excess
structures that you select.
How can I keep the
premiums down?
There is a range of
possible options:
- You could go for a
voluntary excess- paying an additional first amount of a claim to the
standard excess, this could reduce your premium by up to 30-40%.
- Other reasons for getting
a discount include installing security devices (such as a gear lock,
alarm, immobiliser, tracking device), keeping your car in a garage,
driving a low annual mileage and insuring House Owners and/or Contents
with Priceless (an underlying policy like this is mandatory on
Priceless).
There are so many
companies offering car insurance. How do I choose between them?
Some of the cheapest quotes
come from the new-style direct insurers. However, as in most things, the
cheapest is not always the best. The "direct writers" deal
directly over the telephone with you, one individual, thus severely
limiting your bargaining power.
An alternative is to use Priceless, a broker, who will not only ensure that you get the best quote
for the type of cover you will be receiving; but also act on your behalf
on any issues in relation to your policy, e.g. claims, policy cover,
premium etc.
Priceless will also ensure
that the cover you are getting is actually appropriate for your
circumstances and that your excess is exactly what you are expecting.
What sort of things
should an insurer/broker be told?
As the law stands,
tell the insurer anything that could be seen as relevant under your duty
of disclosure. For example, if you are insuring your student son's car in
your name, give full details of who will be driving the car most and where
it will be kept
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