Chapter 1 - Motor Insurance

Question 1

what is the most significant compulsory insurance in the UK?

Answer 1

private motor insurance

Question 2

what are the 4 levels of private motor insurance cover?

Answer 2

1. road traffic act only
2. third party only
3. third party fire and theft
4. comprehensive

Question 3

what is road traffic act cover?

Answer 3

the minimum cover needed to comply with the Road Traffic Act 1988

Question 4

what does the EU Motor Directive require in terms of minimum amounts and scope of cover?

Answer 4

minimum amount of 3rd party property to be adjusted in line with inflation every 5 years

Question 5

what does RTA cover provide in terms of bodily injury/ death?

Answer 5

indemnity for bodily injury/ death to 3rd parties inc passengers for an unlimited amount

Question 6

what does RTA cover provide in terms of property damage belonging to 3rd parties?

Answer 6

indemnity for loss limited to 1.2 million

Question 7

does RTA cover include indemnity for claims costs?

Answer 7

yes - indemnity for claimants cost and claims handling expenses

Question 8

in order to comply with Third EU Motor Insurance Directive what must policies also provide?

Answer 8

1. minimum cover required by the EU country being visited or minimum cover where the vehicle is usually kept - whichever is greater
2. cover for liability to people in employment of the insured when travelling as a passenger during employment

Question 9

what did the Fifth EU Motor Insurance Directive do?

Answer 9

made the different between RTA and TPO marginal - meaning the lowest level of cover provided by insurers is TPO

Question 10

what does Third Party Only insurance cover?

Answer 10

vehicles while not on a road or in a public place that is within territorial limits

Question 11

what cover does TPO provide in terms of third party property damage?

Answer 11

a £20 million limit for 3rd party property damage for private car policies

Question 12

does TPO provide indemnity for other drivers?

Answer 12

yes - indemnity for anyone driving or using the vehicle on insureds order or permission unless driving is restricted to named drivers

Question 13

what are some exclusions that may relate to 3rd party liability?

Answer 13

1. damage to property owned or in custody of any person claiming indemnity under the policy
2. liability covered by any other insurance policy

Question 14

what does Third Party Fire and Theft Cover?

Answer 14

cost of repairs or compensation if their vehicle is damaged by:

1. fire, lightning or explosion
2. damaged during attempted theft or theft
3. stolen and not recovered

Question 15

what is comprehensive insurance?

Answer 15

the most common form of motor insurance which offers the widest protection

Question 15

why do people choose TPFT cover?

Answer 15

don’t want to pay more for comprehensive cover but still want some key elements of cover

Question 16

what are some exclusions on a comprehensive policy?

Answer 16

1. loss or damage to spare parts and accessories unless on vehicle or in the insureds garage
2. wear, tear and depreciation
3. mechanical and electrical failure or breakdown
4. damage to tyres caused by punctures or bursts

Question 17

what does the term ‘inexperienced’ mean?

Answer 17

having a provisional license or not holding a full licence for a year

Question 18

what do some insurers class as ‘young drivers’?

Answer 18

anyone under 25

Question 19

what is an excess?

Answer 19

the first amount of each claim the insured must pay

Question 20

what further benefits does comprehensive cover usually include?

Answer 20

1. personal accident
2. medical expenses
3. personal belongings and clothing

Question 21

what does personal belongings and clothing cover mean?

Answer 21

cover for any personal effects and clothing in the car lost or damaged by accident, fire or theft

Question 22

how do insurers usually reduce NCD entitlement?

Answer 22

dropping back 2 years if a claim is made

Question 23

how does ‘protected’ bonus work?

Answer 23

a defined number of claims can happen without affecting the level of discount - some insurers offer ‘guaranteed’ discount after 5 years of claim free driving

Question 24

what is the uninsured driver promise?

Answer 24

cover for when an individual is involved in a claim when the third party does not have insurance

Question 25

what does the uninsured driver promise not cover?

Answer 25

hit and run accident where the 3rd party cannot be traced

Question 26

what are some optional extensions on motor insurance?

Answer 26

1. breakage of glass
2. personal belongings and clothing
3. young additional drivers
4. loss of use
5. personal accident benefits
6. breakdown cover

Question 27

what does a loss of use extension include?

Answer 27

where most insurers will pay for a replacement vehicle which the insureds is off of the road.

Question 28

what does a breakdown extension include?

Answer 28

where they are able to call a control centre for assistance but the insured then pays for labour and parts when help arrives

Question 29

what is a multicar policy?

Answer 29

where households have more than one car on a policy - must be registered at the same address

Question 30

what are motor legal expenses?

Answer 30

provide cover following an accident where the insured is not at fault - provides cover to pay lawyers costs

Question 31

what part of a policy do insurers put trailers?

Answer 31

third party

Question 32

what does the term ‘motorcycle’ include?

Answer 32

any kind of mechanically propelled cycle including mopeds