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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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