Independent consumer guide to motor insurance

Transcription

1 Independent consumer guide to motor insurance

2 Who we are and what we do We regulate financial services firms in Ireland including banks, building societies, insurance companies, brokers, moneylenders, investment companies, mutual funds and stockbrokers. It is our job to ensure that you, as a consumer, are protected in your dealings with regulated firms. We do this by monitoring the solvency of firms and by ensuring they comply with legislation and codes of conduct. We aim to help you make informed financial decisions by providing independent information about financial products in plain English. We also offer support and assistance to you in your dealings with regulated firms.

3 S lo-call Contents Purpose of this guide 3 Do I need motor insurance? 3 Section 1: Types of motor insurance 4 Section 2: Costs and no claims discount 7 The excess 8 About your no claims discount 8 Protecting your no claims discount 9 Step back protection 10 Insuring and second car 10 What happens to my NCD if I stop driving for a while? 10 Section 3: Shopping around for cover 11 What can I do if I am refused motor insurance? 11 What can I do if I think I am being charged more than I should be? 12 Questions to ask about motor insurance 13 Do s and don ts 14 Shopping around for motor insurance 14 Financial terms explained 16

4 Motor Insurance 2 This is a general guide to motor insurance. Nothing in this booklet is intended to be, or should be construed as: 1 An invitation, offer or inducement to you or any other person to enter into an insurance arrangement, OR 2 Advice on the merits of, or a recommendation in relation to, any particular product or product provider.

5 S lo-call Purpose of this guide This guide describes how motor insurance works and what is likely to be covered by a typical private car insurance policy. The guide does not deal with the wider issue of commercial vehicle insurance. 3 It gives general information only, and you should always check your own policy document for full details of your cover. Our other independent consumer publications include a range of cost surveys and guides on insurances, mortgages, personal loans, savings and investments. You can get copies of our publications by calling our consumer help-line on lo-call , visiting our Information Centre, or by downloading the information from our website, Do I need motor insurance? The only insurance required by law is third-party motor insurance. This covers any injury or loss suffered by other people as a result of negligence by you or others driving your car. It is a criminal offence to drive in a public place without third party insurance or to allow your car to be used by somebody else without this minimum level of cover. You can buy motor insurance that gives you just the legal minimum third party cover, although this is only available from a limited number of insurers. However, depending on your circumstances and on the age and value of your car, you may want to widen your cover to include the costs of repair or replacement if your car is stolen, damaged or destroyed. The first step is to consider what level of insurance you need. There are three basic types of cover: third party; third party, fire and theft; and comprehensive.

6 Motor Insurance Section 1: Types of motor insurance 4 Third-party cover Third-party insurance pays out for claims that others make against you for damage or injury as a result of your driving. It covers you for claims other people make against you for: personal injuries; and damage to their property caused by your negligence or by negligence of a passenger in your car. Third-party insurance does not allow you to claim for: damage to your own car; theft of your car; or loss of or damage to any property in it. Third-party fire and theft cover As the name implies, this policy gives you third party cover as above, but also allows you to claim for loss or damage to your own car as a result of fire or theft. Some policies also cover you for theft or attempted theft of personal belongings from your car up to a maximum limit. As you might expect, the premium for third party fire and theft is higher than for third party only. Comprehensive cover This gives you third party, fire and theft cover and also includes damage to your car no matter who is to blame. You can expect to pay a higher premium for comprehensive motor insurance than for third party fire and theft cover. If your car is old or low in value, consider whether the extra cover you would get from a comprehensive policy is worth the extra premium. The benefits on a comprehensive policy can vary widely between insurance companies. As a guideline, you could expect some or all of the following benefits to be included in the standard comprehensive premium.

7 S lo-call Comprehensive policy benefits 5 Windscreen/ glass cover Damaged or stolen personal effects Recovery Service/ Emergency breakdown Driving other cars Replacement or hire car Either unlimited cover or limited to a maximum amount in any year. Claims do not usually affect your no-claims discount. Usually items are covered only if stolen from a locked boot or dashboard storage. The total you can claim is usually depending on the policy. Many insurers supply a freephone telephone number to contact if your car breaks down so that the nearest recovery service can be sent to you. When you drive someone else s car, you would be covered for any damage you do to another car or person. It does not cover any damage you do to the borrowed car. You may be covered for a replacement or a hired car if your own car is off the road as a result of an accident. Claims are often limited to the first few days of car hire or replacement.

8 Motor Insurance 6 Some of the following extra benefits may be available depending on the insurer. These benefits are not usually included in the standard comprehensive premium. Check how much, if any, extra premium you will have to pay for them. Optional benefits on a comprehensive policy No-claims discount This means you would still keep your no-claims discount protection for fire (NCD) if you had claims for fire or theft. and theft claims only No-claims discount This means you can have a certain maximum number or value protection for of claims within a set period and still keep your full no-claims any claim discount. Most insurers charge extra for this. Step-back bonus protection Named driver on your car Driver personal accident cover Open driving This is not full NCD protection. If you have a claim, you would lose part of your no-claims discount, but not all of it. For example, you may lose 20% of your NCD. Some insurers do not charge extra for this, others do. The amount of extra premium you pay will usually depend on the age, driving experience and type of licence of the person being added as a named driver. This may affect the premium category you fall into for example with some policy types a female policy holder may be put into a higher premium category if a named male driver is added to the policy. Limited cover for death or for loss of sight or limbs as a result of a car accident. This means that other people driving your car with your consent are covered by your policy as long as they hold a valid licence. Only a small number of insurers offer this cover and there are usually restrictions as to who can drive your car. You should check your policy for details of these restrictions.

9 S lo-call Section 2: Costs and no claims discounts The premium you pay for your car insurance depends on a wide range of factors. These are: 7 Type of cover Third party, third party fire and theft or comprehensive. Driver age and gender The younger you are the higher your motor premium, especially if you are male. Drivers may also have to pay more once they are over 65. Women tend to have fewer claims and therefore pay lower premiums than men. Type of licence Provisional licence holders are charged more than those with full licences. No-claims discount Your premium will be reduced by up to 50% on most policies and 70% on some, depending on the number of years since you made a claim, or had a claim made against you. Type and value of vehicle Your premium will increase if you trade up to a higher value car or one with a high performance engine. You could also expect to pay more if your car is imported or if there is a higher incidence of theft claims on the model of your car. You will usually have to pay commercial premium rates if you drive a van even if it is only for domestic use. Driving experience Even if you have a provisional licence, many insurers will give you an introductory no-claims discount to take into account relevant* driving experience. Insurers will also take account of driving experience on a company car policy where you have had full use of the company vehicle. Convictions and penalty points Serious motor offences such as dangerous or drink-driving can result in an increase in your premium. Penalty points have the same effect, depending on the number of points. You may even be refused cover for certain convictions. Named drivers The cost of adding a named driver to your policy depends on their age, whether they hold a full or provisional licence, their driving experience and claims history. The cost can also be affected by their occupation, relationship to you and how often they use the car. *Relevant driving experience usually means experience on your own policy or as a named driver on someone else s policy, but does not include driving on someone s open-drive policy.

10 Motor Insurance 8 Usage It costs more to insure a vehicle for commercial use than for personal use. Personal use includes driving to and from work. Your occupation People in some jobs have been found to make more claims than those in others and so pay higher premiums. Location risk This refers to where you live and where your car is normally parked. You would pay a higher premium if you live in a city than you would in a rural area. And even within cities insurers can apply a further premium loading in certain areas depending on their claims experience. The excess The excess is the amount of any claim you make that you have to pay for yourself. The amount varies, but is generally around 150, sometimes more. You will not be able to claim for amounts less than the excess. About your no-claims discount (NCD) Your no-claims discount (often called your no-claims bonus ) is a reduction in your premium based on the number of years since you made a claim or a claim was made against you. Your NCD can be transferred from one insurance company to another, and from one car to another. The maximum discount is allowed if you have no claims in the last five years. If you have not had a claim for ten years you will still only get the five-year maximum. A full no claims discount usually means your premium is 50% less than it would be if you had no discount. Your discount may be reduced or lost if you make a claim or if a claim is made against you. This is the case even if you were not at fault for example, if your car was stolen. In a case where you lose your NCD and were not at fault, your NCD may be reinstated if your insurance company recovers its costs from a third party s insurance company.

11 S lo-call Protecting your no claims discount 9 Some insurers will offer you the chance to protect your no claims discount either fully or partly. As this is an added benefit on your policy, you will usually have to pay extra for it. Depending on the insurer, you may be able to choose either: 1. full no claims discount protection; or 2. step-back protection Full no-claims discount protection Full no claims discount protection usually means that without losing (or reducing) your no-claims discount you can have: any number of fire and theft claims, of any value; and any two claims within three years as long as the total claim is no more than 2,000 (sometimes 3,000); or any one claim for any amount within three years. If your total claims go over these limits, you would lose your no-claims discount completely. You can expect to pay a higher premium for full no claims discount protection than for step-back protection, explained overleaf. You can transfer a no claims discount to any new insurer at renewal. However, you may not be able to transfer no claims discount protection. This means that if you have had a claim or if someone has claimed against you, your no claims discount may be protected only while you remain with your existing insurer. A new insurer may not recognise this NCD protection, and may calculate your no-claims period from the date of the last claim. This can make it costly to switch insurers even if the other insurer is offering a lower basic premium.

12 Motor Insurance 10 Step-back protection This refers to the percentage of your no-claims discount that you could lose if you made a claim. For example, if you had a 50% no-claims discount it could be steppedback to 30%. Instead of losing your full bonus, you would therefore lose only 20%. With some insurers, any claim you have could result in a loss or step-back of your no-claims discount. This could mean paying up to double your premium at next renewal. With others, your no-claims discount may be reduced (stepped-back) only after you have had a certain number of claims, or claims over a certain amount. The important point is to check in advance how your no-claims discount would be affected by a claim. If you have the full five-year discount, any loss or step-back will make a substantial difference to your next premium, and it might be cheaper to pay for the damage yourself if the claim is for a small amount. Insuring a second car Your no-claims discount is specific to one car at a time. This means if you buy and insure a second car you would not automatically get your no-claims discount. Some insurers will give you an introductory discount if you have a good claims record on your main car. With others, you may have to build up your no-claims discount on a yearly basis on the second car. What happens to my NCD if I stop driving for a while? If you have no insurance in your own name for two years or more, many insurers will not give you your old no-claims discount when you re-apply for cover. Before you sell your car or go abroad, check with your insurer how your case would be treated.

13 S lo-call Section 3: Shopping around for cover Motor insurance must be renewed each year. Your insurance company must make sure you get a renewal notice at least 15 days before your policy expires. The renewal notice must contain details of any no-claims discount you have, so that you have a chance to shop around before renewal. There are two main ways of buying car insurance: buy directly from an insurance company; or 11 buy through an an intermediary (broker or financial advisor). You can shop around in person, by phone or online. If you are part of a group insurance scheme (perhaps through your work or other associations), you may be able to get better value cover through the scheme than as an individual buyer. So, it is worth checking this out first. Premiums on motor policies can vary widely depending on the insurer and on how you buy the cover. For example you can get special rates for buying online. When shopping around, get as many quotes as you can from as many sources as possible before making a decision. Use our Shopping around for motor insurance chart at the back of this booklet and get a copy of our most recent motor insurance cost survey to help you to work out the best deal. What can I do if I am refused motor insurance? An insurance company can refuse to give you cover, but if you ask for an explanation, they must write and tell you why. If you are refused cover by three or more companies you can contact the Declined Cases Committee of the Irish Insurance Federation. They will get an insurance quotation for you (usually the first company you approached will be required to quote) unless there are good public policy reasons why you should not be given motor insurance.

14 Motor Insurance S lo-call For the committee to consider your case you must first have looked for and been refused a quotation in writing from at least three insurance companies. The committee can be contacted at: Information Service, Irish Insurance Federation, 39 Molesworth Street, Dublin 2. Phone: What can I do if I think I am being charged more than I should be? age sexual orientation gender disability race religion marital status family status membership of the traveller community. Under current equality legislation, when you buy goods or services you cannot be discriminated against purely because of any of the following nine grounds: In the case of motor insurance, you cannot be refused cover or charged more solely on any of the above grounds unless the insurer can show that the difference in treatment is reasonable and is justified for underwriting or other commercial reasons. If you would like more information you can contact the Public Information Centre of the Equality Authority (lo-call ; Do not try to reduce your premium by concealing relevant information, such as previous accidents or driving offences. If you do, your insurer may be entitled to refuse to pay for damage to your car. They may be obliged under EU law to pay out for a third party claim, but they could be entitled to pursue you for recovery of the money.

15 S lo-call Questions to ask about motor insurance What type of policy do I need? Will I continue to get the benefit of a full no-claims discount if I switch insurers? What discounts and/or loadings apply in my case? Is it possible for me to reduce my premium, for example by switching to a lower powered car? This is particularly relevant for younger drivers. What are the set charges for a broker s service? Is this in addition to the commission payable by the insurance company? By law you have to be given this information if you ask for it. Is there any extra benefit from using a broker for example claims assistance? Could I reduce my premium by opting for a larger excess?

16 Motor Insurance Dos and don ts when buying motor insurance 14 Do Do get quotes from as many companies as possible and through as many sources as you can in person, by telephone and online. Do read the policy details to see what is covered and any exclusions. Do make sure that you are getting full credit for your driving record. Do make sure that you get your renewal notice and details of any noclaims discount at least 15 working days in advance of the renewal date. By law you are entitled to get this information. Do consider the conditions under which you are granted a no-claims discount and under which you may lose it. Do bargain with your current insurer. They may agree to match or better another quote in order to keep your business. Do note exactly how much you are paying for credit if you decide to pay your insurance by instalments. By law, you must be informed of the cost of credit and the annual percentage rate (APR). The APR allows you to compare credit costs between different providers. Do make sure you are completely honest with your insurance company about your driving record, including any offences, or you risk invalidating your insurance. Don t Don t skimp on the shopping around. Don t over-estimate the value of your car. If you had a fire or theft claim, the insurance company will only pay what they consider to be the market value of the car at the time of the loss, no matter how much you have it insured for. Don t allow anyone else to use your car unless you are absolutely certain they are insured to drive it. If your car is involved in an accident your insurance record could be affected regardless of who was to blame, and you could face prosecution for letting your car be driven uninsured. Do not try to reduce your premium by concealing relevant information about any previous claims. Your insurer may reject any future claim for fire, theft or accidental damage to your car.

17 S lo-call Shopping around for motor insurance 15 Date: Contact details Company or broker name Phone no. Contact name Quotes Third party, fire & theft quote Comprehensive quote Additional cost for named driver (if any) Valid until Benefits & notes (tick) No claims discount protection Personal accident cover Windscreen cover without affecting no claims discount Policy excess Recovery service Replacement or hire car Contents cover to a certain limit Driving of other cars Other Payment options Credit Card Laser Instalment plan available Total cost with instalment plan (compare with quotes above) Deposit required

18 Motor Insurance Financial terms explained 16 Commission: Percentage of your premium that your broker or advisor receives from an insurance company for introducing your business to that insurer. Excess: The amount of any claim that you have to pay for yourself. It is usually a fixed sum. It may not apply to certain types of claim, for instance windscreen replacement. Exclusion: Things that are not covered by your insurance for example damage caused by gradual wear and tear and not a specific event covered by the policy. Intermediary: A firm (broker or agent) regulated by us (the Financial Services Regulator) that provides advice about or sells investment, mortgage and/or insurance products on behalf of financial institutions (product producers). Loading: An extra premium charge applied because of something specific like the age of a driver or the model of your car. No-claims discount: A percentage reduction in your premium based on the number of years since a claim has been made, up to a maximum of five years. It is usual on motor insurance policies and occasionally given on house insurance. Non-disclosure: Where someone who is applying for insurance leaves out relevant information. Non-disclosure may invalidate a policy. The insurance company can cancel cover or refuse to pay a claim where non-disclosure occurs.

19 S lo-call If you need to find out more, contact our consumer helpline on lo-call visit our website or drop in to our informationcentre College Green, Dublin 2 We have produced this publication using guidance on plain English techniques from the National Adult Literacy Agency.

20 Because it s your money, contact us: Consumer help-line: lo-call Information Centre: College Green, Dublin 2 consumerinfo@ifsra.ie If you would like to receive this information in Irish or if you have difficulty reading this information and would like a version in large print or Braille then please contact us on lo-call Údarás Rialála Seirbhísí Airgeadais na héireann PO Box No 9138 College Green, Dublin 2, Ireland T F W Irish Financial Services Regulatory Authority CG 10/04 GMI