Motor Insurance Explained

Read Your Policy!

Motor insurers usually issue three documents.

The Certificate of Insurance - this is evidence of insurance as required by the Road Traffic Act.

A Cover Note - acts as a temporary policy and also as a temporary certificate of insurance for the purposes of the Road Traffic Act.

The Policy Document - sets out in full the terms and conditions of your policy.

You should read your policy carefully - there is no small print or difficult language in modern insurance policy booklets.

The Law

The Road Traffic Act requires all motorists to be insured against their liability for injuries to others (including passengers) and for damage to other people's property resulting from use of a vehicle on a road. It is an offence to drive your car or allow others to drive it without insurance.

How Premiums are Calculated

Factors taken into account in costing your insurance include who will drive, the type of car, where it is kept, the uses to which it is put, and the type of cover required.

When buying motor insurance you must give the insurer full information.

Drivers

The policy may only cover driving by yourself or specified people, or it may allow driving by any qualified person with your permission, possibly over a certain age limit. Your insurers will want to know about anyone who is likely to drive - particularly their age, experience, driving record and occupation.

Your Car

Family cars with moderate repair costs are cheaper to insure than large or powerful cars which can be expensive to repair.

Each model is given an insurance group rating. This system is described later in this Information Sheet.

Older cars often attract discounts from comprehensive insurance premiums.

District

Insurance claims are more frequent in urban areas so motorists in cities usually pay more for their insurance than those who live in the country. The place where the car is kept is a rating factor, so tell your insurers if the car is not kept at your home address.

Use

Your policy and certificate set out the uses for which your car is insured. For example, if you or any authorised driver want to use your car in connection with work, make sure that your policy covers this.

Driving Other Cars

Some policies cover the policyholder in person while driving a car which belongs to someone else.

However, cover will be limited to third party only, even if you have a comprehensive policy. Accidental damage to the borrowed car will not be covered by your insurance.

Make sure you have the car owner's permission to drive it and that they have arranged comprehensive insurance to cover you as a driver under their policy. If they have done this, then accidental damage claims to their car, while you are driving, will be met by their policy.

Similarly, before letting someone else drive your car make sure your policy does not have a restriction on who may drive it.

Drinking and Driving

Drink driving convictions are taken very seriously by insurers. Convicted drivers returning to the roads may face difficulty in obtaining insurance and will certainly 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 can well last for a number of years.

Giving Lifts

All motor insurers have agreed that if your passengers contribute towards your running costs your insurance cover will not be affected, as long as lifts are given in a vehicle seating eight passengers or less. This agreement does not apply if you make a profit from payments received or if carrying passengers is your business.

Changing Your Car

You must tell your insurers if you change your car. A premium adjustment may be necessary and you will probably need a new certificate.

No Claims Discount

Policyholders with a claim free (not blame free) record normally qualify for a premium discount. Scales do vary but usually range from 30% for one claim free year up to 60% or more after four or five years.

"Protected Discount" policies are often available for motorists with maximum discount. For an extra premium, a number of claims are allowed without affecting the discount. Typically two claims are allowed in a three to five year period.

Motoring Abroad

All UK motor policies provide the minimum cover required by law in other European Union countries or the minimum cover required by UK law if that is greater. This cover does not automatically include theft or damage to your car and it may not completely cover your liability to other people.

If you tell your insurers in advance, they can extend your UK level of cover to most holiday destinations.

Your insurers can also supply a Green Card. This is recognised internationally as evidence that you have insurance which meets local law.

The further information regarding motoring abroad is covered in detail under the heading 'Driving Abroad'

Look After Your Car

All insurance policies require you to make sure your car is in a roadworthy condition. If you don't, you may find that your claim will not be paid.

From time to time vehicles may be subject to a manufacturer's recall to address a possible safety concern. You should check with your local dealer or vehicle manufacturer to see if your vehicle may be affected.

Tell Your Insurer

You must tell your insurer of any changes in the details given on your proposal form such as address, occupation, type of car and motoring convictions including fixed penalties.

Remember - not only is it an offence under the Road Traffic Act to make a false statement or withhold information for the purposes of obtaining a certificate of motor insurance, but it may also invalidate your policy.

Policy Cover

Two thirds of private motorists have comprehensive insurance. Most of the remainder choose third party fire and theft, with a small proportion taking out more limited forms of cover.

Third Party

This covers:

• Liability for injuries to other people, including passengers.
• Liability for damage to other people's property.
• Liability of passengers for accidents caused by them.
• Liability arising from the use of a caravan or trailer, while attached to the car.

Third Party Fire and Theft

As previous plus

• Fire or Theft - If your car is not normally kept in a garage at night, theft cover may be excluded or subject to special conditions. There may be an "excess" - a part of the cost of the claim for which you are responsible - following an incident of theft. If you are selling your car make sure you receive proper payment before parting with it. Your insurance policy will not cover your loss if your car is taken from you by deception.

Comprehensive

As above and previous plus

• Accidental damage to your own car. There may be an "excess" - part of the cost of the claim for which you are responsible.
• A personal accident benefit. Certain amounts are paid in the event of the death or specific permanent disablement of the policyholder - and sometimes his or her spouse or family member.
• Medical expenses necessarily incurred, up to a stated limit.
• Loss of or damage to personal effects in the car, up to a stated limit.

The Group Rating System

Insurance companies put car models into a varying number of groups, these could be 20, 30 or even 50. This means that each model of car can be accurately banded with cars of similar characteristics.

There can be a significant spread of groups within a particular model range.

How the System Works

Nearly three quarters of all money paid out in motor insurance claims goes on repairing cars. The cost of spare parts and the times taken by repairers are therefore major factors in pricing motor insurance.

The factors used to calculate group ratings are:

• Damage and Parts Costs
  The likely extent of damage to each car model and the cost of the parts involved in its repair. The lower these costs, the more likelihood there is of a lower group rating.
• Repair Times
  Longer repair times mean higher costs and the greater likelihood of a higher group rating. Different paint finishes on modern cars are an important factor. These, too, are taken into account.
• New Car Values
  The prices of new cars identify the higher specification models within a model range.
• Body Shells
  The availability of body shells (the basic frame of the car) is taken into account in group ratings because they are essential for certain accidental damage repairs.
• Performance
  Acceleration and top speed are important factors. Insurance companies know very well, from their claims statistics, that high performance cars often result in more frequent insurance claims.
• Car Security
  Security features fitted as standard equipment by motor manufacturers can help to reduce insurance claims costs. Such features include high security door locks, alarm/immobilisation systems, glass etching, coded audio equipment, locking devices for alloy wheels and visible VIN numbers.

Recommended Group Ratings

The group ratings determined by the Association of British Insurers are recommendations only. Individual insurance companies, depending on their own experience, may vary from these recommendations.

Buying a Car

Motorists planning to buy a new car should check, in motoring magazines, the insurance group rating of the exact model they have in mind. The higher the group number the more will be the premium.

How to Beat the Car Thief

The financial loss of a stolen car is bad enough and although insurance will compensate for this, nothing can help with the shock and inconvenience.

Walk around any car park. You'll see cars with windows open, ignition keys in the lock, sun roofs open, valuable property and clothing on display on the rear seat.

Be sensible. Follow the checklist below every time you leave your car.


Take Care of Your Property

Remember - if you are careless when leaving your car then your claim for theft may not be paid at all. Your insurance policy requires you to take care of your property at all times.

Have all the windows etched with the registration number of your car. This deters car thieves.

Many insurers allow a special premium discount if your car has a professionally-fitted alarm/ immobiliser system. The Motor Insurance Repair Research Centre checks on vehicle security devices to see if they comply with the criteria of the Insurance Industry Vehicle Security Scheme. The list of those products that have passed is used by insurers as a basis for premium discounts and required security. Ask your insurer what systems they approve or require. They may also require the system to be fitted by a member of the independent Vehicle Security Installation Board. Your insurer can advise you about this.

Check List

• Where to leave your car
  At night, park in a well-lit place. Thieves like working in shadows. In a ticket-exit car park, take the ticket with you.
• Remove Car Ownership Information Don't leave your certificate of insurance and registration document in the car.
• Hide Property
  Leave property in a locked boot. In a hatchback the rear shelf should be in position. In an estate car cover up property with a sheet or blanket.
• Remove the Ignition Key
  Don't leave the key in the ignition - not even for just a few seconds to go into your home, a shop or pay for petrol.
• Close All Windows
  When you leave the car, close windows. Don't forget the sun roof.
• Use an Anti-Theft Device
  Thieves are opportunists. They will probably move on to a car without a device fitted.
• Always Lock Doors and Boot/Tailgate
  Even when the car is in your own drive or garage, lock it and take the keys with you.
• Children and Animals
  Never leave young children or animals alone in a parked car. With windows or sun roof open you run the risk of theft. With windows closed there is a grave danger of suffocation.