Your guide to motor insurance

Insurance policies are complicated in every case and not always easy to understand fully. We'll guide you through the terminology and what it means to you.

The Contract of Insurance

When you buy an insurance policy you are entering into a contract. The importance of this is that the insurer has agreed to cover you - based on what you have told them. Don't lie to insurance companies, as they may not pay out on your claim if you have not been truthful or omitted relevant details.

You may well find that your policy does not cover you under certain circumstances which are listed as part of the 'exclusions'.

A good example of how an exclusion can affect you is if you have bought your insurance on a price comparison site fully comprehensive, but did not include 'travelling to and from a place of work'. Your policy will be cheaper, but you would not be covered if you had an accident on the way to work.

If you are going to make a claim, you need to fully understand your policy and the way its is worded.

Fully comprehensive does not cover you for an alternative vehicle or other losses you may have as a result of the incident

Principle of Indemnity

This is very important. It is in fact the fundamental principle of insurance. In other words, this is what your insurance company promises to do.

The principle of indemnity is one where the insurance company promises to cover you for damage. So it;s imperative that you read your insurance policy. It will say you are indemnified 'up to' the market value. Remember this if you are dealing with a total loss vehicle, or if you do not want your car as a total loss.

You should be 'no better or worse off' due to a claim either 'financially' or through 'improvement' of your vehicle. In other words, you cannot claim for unrelated areas of damage, or a financial loss you have not had.

Third Party Fire and Theft

This does not cover you for any damage to your vehicle other than by way of fire, theft or vandalism. But it does cover you for any damage to property or injury you may have caused.

Fully Comprehensive Insurance

This covers your for accidental damage to your vehicle whether caused by yourself, as long as not 'wilfully done' (if you have caused the damage on purpose) and also covers damage by a third party.

This 'may' cover you for damage from weather. Such as floods, wind and hailstones, unless they are specifically excluded from your policy. Though most insurance companies will exclude on your policy what they perceive as acts of God. So it is at their discretion.

Fully comprehensive does not cover you for an alternative vehicle or other losses you may have as a result of the incident. These are called 'uninsured losses' and you would need either legal cover on your policy or have a solicitor pursue these losses on your behalf. As with third party fire and theft, it does cover you for any claim against you.

Exclusions

This is what you are not covered for. And it's why you need to carefully read your insurance policy. You need to do this before you buy to ensure it meets your demands and needs. You need to see what is NOT covered as much as when something IS covered.

An exclusion could be anything from not being covered to use the vehicle on a track day, road racing, testing or a sprint event. Or it could be you have decided not to cover commuting. It is very important you read what is not covered in the event of a claim.

Modifications

Your insurance company will ask you to declare all modifications. The way your insurance company views a modification is anything that your vehicle did not come with from the manufacturer.

You can not imply you did not know it was a modification, as ignorance is no defence of the law. You have agreed to it in your contract of insurance.

So prior to insurance always declare any modifications. If you have a £2000 set of alloy wheels on your vehicle, do not expect your insurance company to replace them should one become damaged if you have not made them aware.

Often you will find insurance companies will not apply any additional loading on a policy for up to three minor modifications. So it is in your interest to make them aware. Do not give them any excuse not to pay.

If your car has options that came from the manufacturer, that's different. Find out what they are, as they may make your vehicle worth more.

>> What is an insurance excess?

>> What's an uninsured loss?

>> What's the difference between a Cat C and Cat D write off?

>> Can you buy back a car that has been written off?

>> How to claim from your insurer after an accident

>> What are your rights following an accident that's not your fault?

>> How to claim from accident management or credit hire firm