Things to Consider When Buying Vehicle Insurance
Vehicle insurance is also known as Motor insurance, Auto insurance or Car insurance. This is insurance for cars, motorcycles, trucks and other road vehicles. Vehicle insurance provides financial protection against bodily injury. It also covers physical loss or damage arising from the use of the vehicle. So this includes bodily injury and/or physical damage caused by traffic collisions. It also includes protection against liability to third parties. Hence, it is one of the most important classes of insurance. In fact, no vehicle can run on the roads without insurance.
More so, a vehicle must have Third party insurance. Yet, the specific terms of vehicle insurance depend on legal regulations in each region. Vehicle insurance may also provide financial protection against the loss or theft of the vehicle. It may also cover damage to the vehicle caused by collision with stationary objects or other non traffic collisions.
Compulsory vehicle insurance began in the United Kingdom. In fact, the Road Traffic Act 1930, made it compulsory for all drivers and vehicle owners to be insured. The insurance covered their liability for body injury or death to third parties arising from the use of the vehicle on a public road.
The Road Traffic Act 1930 aimed at protecting the driver and vehicle owner against financial loss arising out of the use of the motor vehicle. It also protects third parties. This is because the use of motor vehicles became widespread after WWII. The vehicles were fast and dangerous. Yet, there was no compulsory form of vehicle insurance. As a result motor accident victims seldom got any compensation. Also drivers often faced large costs for damage to their car and property.
Common types of Vehicle Insurance
In most countries vehicle insurance is compulsory. So you need a motor insurance before you can keep or use a motor vehicle on public roads. There are many types of vehicle insurance policies. The common ones are:
Third party cover
Third party insurance covers claims for body injury or death to other persons. It also insures loss or damage to other persons property cause by your vehicle.
Third party, fire and theft cover
This insurance covers claims for body injury or death to other people. It also covers loss or damage to other people’s property caused by your vehicle. Furthermore, it insures your vehicle against loss or damage due to theft or accidental fire.
This is the widest vehicle insurance policy. It provides cover against body injury or death to other people. It also covers loss or damage to other people’s property caused by your vehicle. Moreover, it insures your vehicle against loss or damage due to theft, accidental fire or accident.
The standard vehicle insurance will not cover all losses. In fact, it excludes some losses and damages. These include your own death or bodily injury due to a motor accident. It also excludes liability claims from passengers in your private vehicle. Yet, it covers passengers of hired vehicles such as buses and taxis. Also excluded is loss or damage arising from acts of nature. These include landslide, storm and flood damage.
Further, you can extend the insurance policy to cover passengers in your vehicle. The policies can also have an extension to include acts of nature. So, when buying insurance, it important to know the risks that the policy covers. And also find out the excluded ones. This will ensure that you have the right insurance coverage. In fact, you get the extensions by paying extra premium.
Things to consider when buying vehicle insurance
When buying insurance there some important factors to consider. The most important point is to make sure that you have enough insurance cover. So, when buying insurance consider the following.
When buying a vehicle policy ensure you have enough cover. Besides, the insured value of a new vehicle is the value of the vehicle. For other vehicles, the insured is the market value of the vehicle at the time of buying the insurance cover.
Over insurance is where you insure your vehicle at a higher sum than the market value. Yet, in case of a claim, the most compensation you will receive is the market value of the vehicle. This is because the insured cannot profit from a policy of insurance. The aim of insurance is to return you to the financial state you were in before the loss. So, insurance compensates you for the actual loss suffered.
Under insurance is where you insure your vehicle at a lower sum than the market rate. In case of a loss or damage, you are self insured for the balance. Hence, you will only receive compensation in proportion to your insurance. This means that you will share the loss or damage with the insurer. In fact, you will bear the loss to the extent to which you are self insured.
Duty of Disclosure
Insurance contracts are contracts of utmost good faith. So, when buying insurance you must disclose all material facts. In fact, you have to disclose previous accidents, engine modifications, claims experience etc. Furthermore, if you fail to disclose material facts the insurer can deny your claim. In which case, you will become liable for the claim.
The price of insurance is the premium. In fact, you pay the premium depending on the type of policy you want. Also, the insurance premium charged by the motor insurer is the standard minimum rate under the Motor Tariff. Moreover, a policy of insurance comes into force only after you pay the premium.
Yet, the insurer may impose extra charges. This is called loading. This happens where there are higher risk factors. These factors include an older vehicle and bad claims experience. Loading is governed by the states or countries Insurance regulations.
No claim discount
If you have had no claims in the previous 12 months of the policy, the insurer may reward you. This is the no claims discount. So, if you have a no claim discount, you may pay a lower premium. The no claim discount rate varies with the class of motor vehicle.
An excess payment is a fixed contribution that you must pay every time your car goes for repair and the cost charged to your insurance policy. This is also the deductible and is the amount of loss you have bear for the vehicle damage. Often, you pay this amount to the auto repairer when you collect your vehicle. If the vehicle is totally damaged, the insurer will declare it a ‘write off’. The insurer will then deduct the excess stated in the policy from the settlement payment. You can also protect this excess with a motor excess policy.
This is the least excess payment your motor insurer will accept on the insurance policy. In fact, this amount varies depending on driving record, personal details and the insurer.
If you want to reduce your insurance premium you can offer to pay a higher excess than demanded by the insurer. So a voluntary excess is the extra amount that you agree to pay in the event of a damage claim on the policy. Hence, you pay the voluntary excess and the compulsory excess. Since a bigger excess reduces the insurer financial risk, you pay a lower premium.
Principle of indemnity
Insurance contracts are contracts of indemnity. So, based on this principle the insurance policy will only compensate you for the actual loss suffered. In other words, insurance seeks to put you back to the same position you had before the loss. Hence, you are not to profit from a contract of insurance.
This occurs when an accident damaged vehicle is repaired. In fact, in the course of the repair some old parts are replaced with new ones. So, in keeping with the principle of indemnity, you will have to bear the difference in costs. Otherwise, you will be a better position after the accident due to the new parts. Yet, the application of betterment is at the discretion of your insurer.
Actions to take in case of a loss or damage
In case you are involved in an accident there steps to take. Moreover, this will help you with your claim against the insurer.
Take notes of the accident
In the event of a motor accident, take notes of the accident. In fact, note the vehicle registration numbers, names and contacts of the drivers and passengers in the accident. Also, note the make and model of each vehicle involved and the drivers’ license numbers. Further, write down the insurance identification as and the names and addresses of the witnesses.
Make a police report
In fact, the law requires that you lodge a police report of a road accident within 24 hours.
Notify your insurance company
Make sure you notify your insurer as soon as possible. So, you can call and also make a written report with full details. You may also have to notify other insurance companies depending on the type of claim you will make. Furthermore, remember that if you fail to report the accident, you will be liable for the loss. You will also be liable for any third party claims against you
Take your damaged vehicle to and approved workshop
After notifying the insurer, send your damaged vehicle to a vehicle workshop that is approved by your insurer. Besides, you can ask your insurer for the nearest approved motor workshop. In fact, when buying the insurance policy, make sure the insurer clearly explains to you how to handle the damaged vehicle.
How to make a claim against the insurance company
In case of a loss or damage, you have to lodge a claim with your insurance company. This is how you can go about it.
In the event of a motor vehicle accident, you can either make a third party claim or an own damage claim.
Own damage claim
You can lodge an own damage claim on your comprehensive insurance policy. Yet, remember that by doing so you will lose your no claim discount. Besides, this may affect your future premiums. First of all, make sure you notify your insurance company of the accident. Then find out about the names of approved workshops to send your damaged vehicle for repair. Further, submit the completed Motor Accident Report Form to your insurance company. Also include all supporting documents. The motor workshop will repair your vehicle upon receiving approval from your motor insurer. When the repairs are complete, the workshop will inform you to collect your vehicle.
Third party claim
You can lodge a third party claim if you were not at fault in the accident. Besides, you will keep your no claim discount entitlement. In fact, there are 2 ways of making a third party claim. First of all, you can submit your claim directly to the insurer of the party at fault. You can also submit the claim to your insurance company. Yet, it is better to submit your claim to your own insurance company. This is because it allows a speedier claims processing.
Also, as the third party claimant, you need to mitigate your loss. So, you must act to reduce your loss. Hence, appoint a licensed adjuster to assess the loss. Moreover, the third party insurer or the motor repair workshop may advise you on this. Then submit the adjuster’s report and the completed Motor Accident Report Form. Also include all supporting documents. In fact, you can claim from the third party insurer for compensation of excess and compensation for actual repair time.
First of all, submit a claim form to your insurance company. Also, during the course of the investigation, you must cooperate with your motor insurer or its representative. In fact, you will receive a settlement offer from your insurer upon completion of the police investigation. Or within 6 months from the claim notification, which ever comes earlier.
Finally, remember that vehicle insurance is important because it is required by law. It also gives you peace of mind. This is because insurance seeks to put you in the financial place you were in before the loss or damage. Motor insurance will provide legal protection, and non accident protection. It also offers protection against acts of nature, and much more.