Chapter 1 - Motor Insurance Flashcards
Private Motor Standard Policy Cover
Road Traffic Act only
Third party only
Third party, fire and theft
Comprehensive
Third EU Motor Insurance Directive
All policies must provide cover for:
• Minimum cover required by the EU country being visited or where the country is usually kept, whichever is greater.
• Liability to persons in employment of the insured when travelling as passengers in the course of employment.
Road Traffic Act only (RTA)
Is the minimum cover to comply with the Road Traffic act 1988. It provides cover for:
• Indemnity for bodily injury or death caused to third parties, unlimited.
• Indemnity for loss or damage to property belonging to third parties, limited to £1.2 million.
• Indemnity for claimants costs and expenses of handling the claim.
• Cover for any emergency medical treatment and hospital charges, amount specified in RTA.
Third Party only (TPO)
In addition to RTA, TPO usually provides cover for:
• Vehicles while not on a road or public place but within the territorial limits
• Limit of £20 million for private property damage for private car policies
• Indemnity for accidents which occur while the insured is driving a car that does not belong to them
• Indemnity to anyone driving on the insured’s order unless driving is restricted to the named individual
• Indemnity to passengers, employers or business partners
• Legal costs incurred in the defence claim
Exclusions that relate to third party liability:
• Damage to property owned in the custody of any person claiming indemnity under the policy
• Liability covered by any other insurance policy
Third Party, Fire and Theft (TPFT)
In addition to TPO, cover includes the cost of repairs or compensation to the insured if their vehicle is:
• Damaged by fire, lightning or explosion
• Damaged either during attempted theft or while it is stolen
• Stolen and not recovered
Specifically excludes ‘loss of use’ e.g. payment the insured may have to make whilst their car is being repaired or recovered
Comprehensive
Most common Motor Insurance offering the widest possible protection. All loss or damage, however it occurs, is covered subject to specific exclusions which are:
• Loss or damage to accessories and spare parts, unless on the vehicle or in the insureds garage
• Wear and tear and depreciation
• Loss of use
• Mechanical and electrical failure or breakdown
• Damage to tyres caused by road punctures or bursts
No Claims Discount (NCD)
All insurers offer the incentive of a no claims discount. There are discounts of 12% for 1 year claims free and 50% + for 5 years or more claims free. Generally an insurer will reduce the entitlement to an NCD by dropping back 2 years if a claim is made. NCD can be protected for an additional cost.
Uninsured Driver Promise
This extension comes under comprehensive policies. When the insured is involved in an accident with an uninsured driver the insured will protect the NCD.
Private Motor Optional extensions
- Breakage of glass
- Personal belongings and clothing
- Young additional drivers
- Loss of use
- Personal accident benefits
- Foreign use
- Elections
- Racing, competitions, rallies and trials
- Caravans and trailers
- Breakdown cover
- Motor legal expenses
- Joint policies
- Multi car policies
Private Motor Exclusions
- Driving by unlicensed drivers
- Use of the insured vehicle outside that permitted by the policy
- Contractual liability
- War risks
- Radioactive contamination and explosive nuclear assembly
- Sonic bangs
- Pollution and contamination unless arising from a single identifiable event
Motorcycle Insurance Standard Policy Cover
Comprehensive motorcycle policy is much the same as that of the private motor policy.
• Does not cover theft of accessories or spare parts unless the motorcycle itself is stolen at the same time
• Liability section generally indemnifies the insured
• No personal accident benefits and no cover for medical expenses or personal effects
Motorcycle Optional Extensions and Limitations
Optional extensions subject to an additional premium:
• Trailers
• Riding other motorcycles
• More than one cycle insured
• Invalid carriages
Exclusions and limitations of motorcycle insurance are the same as those for private motor insurance.
Commercial Motor Insurance Standard Policy Cover
Main types of commercial vehicles are: • Goods-carrying vehicles • Passenger-carrying vehicles • Agriculture and forestry • Vehicles of special construction Insurers use standard policy wording for all commercial motor insurances. The standard cover is then modified as and where necessary, depending on the vehicle. Some insurers issue separate and specific policies for agriculture and forestry vehicles and certain special types.
Differences Between Commercial and Private Motor Policies
Both provide unlimited indemnity for death or bodily injury to third parties. Private provides a £20million indemnity for third party property damage, commercial provides £5million, and risks like general haulage may be as low as £1.2million. This can be increased for an AP.
Commercial only covers spare parts and accessories while they are on the vehicle.
Driving other vehicles cover is only found on private motor policies.
Commercial Optional Extensions
- Medical expenses and personal accident benefits
- Personal belongings and clothing
- Windscreen/ glass cover
- Indemnity to hires
- Indemnity to principal
- Carnivals
- Sheets and ropes used to secure loads
- Loss of use
- Loss of tools in transit
