Private and Commercial Motor Insurance Flashcards
Private motor insurance is the most significant compulsory insurance in the UK.
True
Private motor insurance
It is illegal to drive or be in charge of a vehicle on a public road unless an insurance policy is in force.
True
Private motor insurance
The policy must cover: the driver’s legal liability for injury to others and damage to their property.
True
Private motor insurance
There are four different levels of cover available, with the lowest level being the most restrictive and extra areas of cover added for each level.
True
Private motor insurance
The following figure shows these in ascending order of the level of the cover provided.
Figure 2.1:
- Road Traffic Act only.
- Third Party only
- Third Party, fire and theft
- Comprehensive.
Increasing cover
It is worth noting that there are other levels of cover, such as ‘fire and theft’ and ‘off-road’. Whilst uncommon, these provide a different level of cover for specific circumstances.
True
Private motor insurance
Road Traffic Act only is the minimum cover required to comply with the Road Traffic Act 1988 (as amended)
True
Road Traffic Act 1988
Road Traffic Act in Private motor insurance covers::::
unlimited indemnity in respect of bodily injury or death to third parties;
a £1,200,000 limit for loss of or damage TO THIRD PARTY PROPERTY (this complies with the FIFTH EU MOTOR INSURANCE DIRECTIVE 2005);
claimants’ costs and expenses; and
emergency medical treatment and hospital charges arising out of the vehicle use.
In accordance with the Third EU Motor Insurance Directive 1992, motor insurance policies issued in the EU must provide cover for the vehicle to be used in any other EU country.
True
(RTA in Private Motor Insurance ,
complying with the Third EU Motor Insurance Directive 1992,)
This cover must be the minimum cover required by either the country visited or the country in which the vehicle is kept, whichever is the greater.
True
(RTA in Private Motor Insurance ,
complying with the Third EU Motor Insurance Directive 1992,)
Also cover for injuries to employees of the insured when travelling as passengers in the course of employment.
True
RTA in Private Motor Insurance
Very few of this type of policy are issued as it is similar to the next type of coverage and most consumers will require more extensive cover than is provided here.
True…..
Road Traffic Act insurance in Private Motor Insurance
Indemnity to user?
the insured may allow others to use the vehicle for social, domestic or pleasure purposes.
Third party cover for the vehicle whilst being used in any country that is a member of the European Union.
When the UK leaves the EU (with or without a deal) policyholders will require proof of cover known as :
a ‘Green Card’, from their UK insurer in order to drive in any European Economic Area (EEA) country.
There are two specific exclusions:
damage to the vehicle itself (regardless of whom was driving it); and
liability covered by another policy (e.g. when driving someone else’s car, cover may be provided under that car owner’s insurance).
Third party, fire and theft includes, in addition to the above:
the cost of repair or compensation to the insured if the vehicle is stolen or damaged during theft or attempted theft;
damage by fire, lightning or explosion.
the cost of repair or compensation to the insured if the vehicle is stolen or damaged during theft or attempted theft; is which type of motor insurance policy?
Third party, fire and theft
Damage by fire, lightning or explosion, is which type of motor insurance policy?
Third party, fire and theft
The same exclusions apply here as to third party only. In addition, to :
‘loss of use’
Third party, fire and theft
The extra expense to the insured of having to use alternative transport whilst their car is out of action is specifically excluded.
True..
(Third party, fire and theft)
Some policies may include a benefit to include cover for a hire car if the subject vehicle is stolen or damaged by theft.
True..
(Third party, fire and theft)
Comprehensive cover is the widest possible protection and includes any accidental or malicious damage to the insured vehicle.
True
Comprehensive cover
The cover is ‘all risks’, in (Comprehensive cover) i.e. all loss or damage is covered , with the following exclusions:
wear and tear;
depreciation;
loss or damage to spare parts and accessories unless on the vehicle or in the insured’s garage;
loss of use (though this can sometimes be purchased as add-on cover, usually in the form of a hire car);
mechanical and electrical failure; and
tyre damage from punctures or blow-outs.
• joint insured clause or cross liabilities clause
(i.e. two or more named insureds are treated as separate policyholders if one has a claim against the other);
A comprehensive policy may also extend cover for the policyholder to drive a vehicle not belonging to them, so long as it is not hired to them under a hire-purchase agreement.
True..
Comprehensive cover extension
This cover only extends to third party liability and does not include damage caused to the vehicle being driven.
True..
Comprehensive cover extension
The policy may also extend to include personal accident, medical expenses and personal effects.
True..
Comprehensive cover extension
Comprehensive cover only extends to :
Third party liability
This extension (driving other vehicles in (Comprehensive cover extension) does NOT cover damages caused to the vehicle.
True..
Comprehensive cover extension
Extensions to a motor policy are widely available, and may be included as part of the core product or offered as additional add-ons for a slightly increased premium (or a combination of both).
True..
Private Motor Insurance cover
A number of extensions in cover that are included without additional cost.
True..
Private Motor Insurance cover
personal accident; medical expenses; personal effects; and USUALLY a ‘drive other vehicles’ extension by the insured only, which is restricted to third party only cover or even Road Traffic Act only cover.
True..
Private Motor Insurance cover
The cover under personal accident, medical expenses and personal effects is very limited and should not be likened to stand alone policies of the same nature.
True..
Private Motor Insurance cover
Cover will automatically include the driving-other-cars extension but this is subject to other policy restrictions (e.g. age of driver)
True..
Private Motor Insurance cover
Usually only provide cover for the minimum that insurer offers (e.g. third party only)
True..
Private Motor Insurance cover
*Many motor policies contain benefits for personal accident as standard, but legal expenses cover is often offered as an added extra, in return for an increased premium.
True..
Private Motor Insurance cover
Examples of the optional extensions available include:(Private Motor Insurance cover)
additional personal accident benefits;
- breakage of glass (on a non-comprehensive policy – it is usually covered by a comprehensive policy);
- breakdown cover (for instance the provision of helplines or a certain amount of cover for the costs of roadside assistance)
- caravans and trailers (usually third party cover whilst attached to the insured vehicle);
- foreign use, that is the provision of cover over and above the minimum required by the EU Directives;
- joint policies.
- legal assistance;
- loss of use at a fixed amount per day or the provision of a courtesy/hire car;
- personal belongings and clothing (in addition to the limited standard cover provided by a comprehensive policy);
- young additional drivers (these may be added as occasional users, but if they are one of the main drivers then the additional premium charged would be based on their age and experience);
- racing, competitions, rallies and trials;
There will be general and market exclusions in addition to the specific exclusions. exclusions such as:
contractual liability,
riot and civil commotion;
sonic bangs (i.e. damage caused by pressure waves from sonic/supersonic aircraft or other aerial device).
terrorism
use other than as specified in the certificate of
insurance
war risks;
Motorcycle insurance includes any mechanically propelled cycle, and is also subject to the Road Traffic Act provisions.
True
Motorcycle insurance
The policy format is the same as that for private motor insurance, with the following differences
True
Motorcycle insurance
Usually no automatic cover for theft of accessories or spare parts unless the motorcycle is also stolen
True
Motorcycle insurance
The liability section generally indemnifies the insured or their personal representatives in the event of their death) and others who were permitted to drive the motorcycle or who used it for social, domestic and pleasure purposes
True
Motorcycle insurance
No personal accident, medical expenses (beyond emergency treatment fees) or personal effects cover.
True
Motorcycle insurance
The policy exclusions are essentially the same as for private motor insurance.
True
Motorcycle insurance
Accessories or spare parts is an extension covered for an additional premium
True
Motorcycle insurance
Trailers is an extension covered for an additional premium
True
Motorcycle insurance
Driving other cycles is an extension covered for additional premium
True
Motorcycle insurance
More than one cycle is an extension covered for an additional premium
True
True
Motorcycle insurance
Invalid carriages is an extension covered for an additional premium
True
Motorcycle insurance
Commercial vehicles is a form of commercial insurance:
True
Commercial motor insurance
The main types are:
goods-carrying vehicles;
agricultural and forestry vehicles; and
passenger-carrying vehicles;
special construction vehicles, e.g. ambulances, cranes, fork-lift trucks.
True
Commercial motor insurance
The insurance is PRIMARILY concerned with the risks that attach to the vehicles themselves whilst being driven, parked or carried by sea or air within the UK.
True
Commercial motor insurance
There is UUALLY a standard policy wording, which is then modified depending on the type of vehicle insured.
True
Commercial motor insurance
The range of cover is largely the same as for private motor insurance.
True
Commercial motor insurance
The cover (Commercial motor insurance) varies from it (private motor insurance) in that certain benefits are excluded,
e.g. driving other cars,
personal accident and personal effects cover.
The third party liability section provides unlimited indemnity for death or bodily injury to third parties. There would be a limit of, for example,
£5m for third party property damage.
Commercial motor insurance
What does this enable the underwriter to do?
limit the level of its liability on a case-by-case basis, depending on the nature of vehicle insured and goods carried.
Loading or unloading cover?
for third party liability can also be applied to accidents whilst loading and unloading.
Indemnity to driver?
USUALLY anyone may drive on the insured’s order or with their permission.
There is a fairly extensive portfolio of optional extensions available at an additional premium.
(Commercial motor insurance)
e.g. medical expenses, windscreen cover, loss of use etc.
Often included or are available as extensions of cover.
True
Commercial motor insurance extension
the cost of commercial vehicle windscreens can be very high indeed and there may be a limit on the policy. Think about the size of a windscreen on a large articulated lorry;
True
Commercial motor insurance extension
loss of use (cover for costs of alternative arrangements while the vehicle is being repaired);
True
Commercial motor insurance extension
Increased third party property damage limit; this is especially relevant for :
large special type vehicles, such as earth movers and cranes which could potentially do a lot of damage as a result of their size and the nature of the work undertaken;
personal belongings is relevant in ((Commercial motor insurance extension))
for long-distance lorry drivers who spend several nights on the road and may carry reasonable values of personal effects which could be lost in the event of serious accident, fire or theft;
Indemnity to hirers;
where some companies often hire out commercial vehicles either on a regular or infrequent basis.
Limitations are typically the same as for private motor insurance….
True
Commercial motor insurance extension and Private motor insurance
All of a business’ company cars or a fleet of trucks and vans, is an example of?
Fleet insurance
A minimum number of vehicles is required before insurers will consider rating vehicles as a fleet.
True
Fleet insurance
The majority of insurers require ten or more vehicles to be covered before fleet rating is applied, though some will offer ‘mini-fleet’ policies for over five vehicles if the premium is high.
True
Fleet insurance
Generally, the cover (Commercial motor insurance extensions) available is similar to that offered under private motor policies; however, other covers are often included, for example:
• contingent third party insurance • joint insured clause or cross liabilities clause • occasional business use • roadside assistance; and • helplines. (Commercial motor insurance extensions)
• occasional business use
(As per the contingent extension but for comprehensive cover);
contingent third party insurance; for example,
Providing indemnity to a policyholder (which is an employer), where an employee is using their own vehicle on the employer’s business and their own insurance (which is intended to indemnify to the employer) proves to be inoperative
joint insured clause
(i.e. two or more named insureds are treated as separate policyholders if one has a claim against the other).
occasional business use;
This is providing indemnity to an employee of a policyholder employer, where the employee is using their own vehicle on the employer’s business but it is known that their own policy does not cover business use.
*This is distinct from the contingent indemnity to the employer described above.
roadside assistance; helplines, message handling and administration. are:
Commercial motor insurance extensions
On larger fleets the statistical basis becomes more genuinely reflective of account performance.
True
Fleet Insurance
These can cover hundreds or thousands of vehicles.
True
Fleet Insurance
To reduce administration for the policyholder and insurer by having a single multi-vehicle policy, what reason is this?
One of the purposes for Fleet Insurance.
The premium for which can be adjusted at agreed periods, instead of doing so at times of individual changes.
One of the purposes for Fleet Insurance.
