What should I know about motor insurance?

Vehicle owners regularly “shop around” for their best deal in motor insurance. Before you start comparing what’s available, remember the cheapest is not necessarily the best and different quotes may be for different coverage. It’s important to check whether the policy you intend to buy meets your needs. The usual types of cover available are:

  • “Road Act.” This gives the cover required by the Road Traffic Act and no more. The essential element is for liability toward third parties in respect of bodily injury or death.
  • “Third Party.” This gives cover against liability to third parties, not only in respect of death or bodily injury, but also for damage to third party property.
  • “Third Party, Fire & Theft.” This adds cover for the risks of fire or theft damage to the insured’s own vehicle.
  • “Comprehensive.” This includes all the risks described above as well as the very important element of accidental damage to the insured’s own vehicle

Depending on the age and condition of your vehicle, you may not be able to get “Fire & Theft” or Comprehensive insurance. And while the existing minimum requirement is only Road Act, this does not provide for any damage that you may cause to other persons’ property.

Your policy will specify the purposes for which your vehicle may be driven. For example, if you want to use your vehicle for your work, make sure your policy covers this. Most policies have driver restrictions, so check the insurance certificate or policy before allowing anyone to drive your vehicle for any purpose.

Most policies pay the lower of the sum insured or the market value of the vehicle at the time of the loss or damage. This is why you need to have your car inspected and valued before the policy is issued or at the next renewal. Policy holders who have made no claims may be eligible for a discount. This eligibility may be lost if the insurer has to pay you for a claim, even when the accident was not your fault. The scale of discounts varies, but a policy holder who has earned a no claim discount with one insurer and changes insurers will usually be given a discount by the new insurer, providing they can produce documentary proof of entitlement. If you are changing vehicles, your discount can be transferred from the vehicle you are selling to the new vehicle you are buying.

You must tell your insurance agent of any changes in the details given on your application, such as address, occupation, type of car and motoring convictions. It is an offence to make a false statement or withhold information for the purposes of obtaining a certificate of insurance, and it could also invalidate your insurance policy.

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