Eleven Important Auto Insurance Categories

: Your insurance excess is the amount you must pay towards any claims you make on your comprehensive policy. It can be in three parts. The compulsory excess is the minimum amount the insurer makes you pay towards the repair costs. This could be around $270. Then there’s a voluntary excess whereby you agree to pay more if you claim on the policy. This could be anything really but is often around $370. Choosing a voluntary excess should reduce your insurance premium. Finally, there may be a young driver’s excess which applies to people under the age of 25. The repairs garage won’t release your car until you pay the excess. The whole point of an excess is to put you off making minor claims.

Interim payment: This is an initial payment to tide you over, perhaps if your car is off the road and you need to get a repair done, or you’re out of pocket because you had to pay an excess. Your lawyer should write to the insurer and insist it makes an interim payment — and if the insurer refuses, threatening to take them to court.

Legal Expenses Insurance Cover: This is an “add-on” sold at the same time you take out or renew your car insurance policy. It normally costs $35-45 and covers the cost of legal advice as well as bringing a case for your uninsured losses. You may already be covered under your home insurance policy, so check first. It will inevitably contain a clause allowing the insurer to withhold or withdraw funding for legal action if “there are no reasonable prospects of success.” Financial Services Authority research found most people do not understand what this cover provides. Most of the cover you need, such as the costs of defending a civil action, is covered by your main insurance policy. If you’re injured as a non-fault driver, you can contact a no-win no-fee lawyer.

Loss of Use: If your vehicle is off the road being repaired, you don’t have to hire a replacement vehicle. If you choose not to hire a car, you can claim for loss of use of the vehicle at around $85-120 per week, subject to negotiation.

Mitigation of Loss: It’s often said that you — as a non- fault driver — have a duty to minimize your costs after an accident. This isn’t quite true. The legal requirement is: you must act reasonably. Despite what the insurance industry tells you, you don’t have to get lots of quotes for repair and hunt around for the cheapest. You don’t have to go around various car hire companies to hire at the lowest rate. But you must act reasonably. This means you shouldn’t run up excessive storage charges, you should contact the at-fault insurer as soon as possible to tell them where your car is being stored and/or repaired, and you should keep an eye on the repairers, so it doesn’t take too long to get repairs done.

Premium: This is the annual fee for your car insurance. If you make a claim, you’ll find your premium may well increase even if the accident isn’t your fault. The insurers will cancel the increase only if and when they recover all the outlays from the at-fault insurer.

Repair estimates & pro forma invoices: In the past, some at-fault insurance companies have made claimants produce several quotes and repair estimates before they’d approve a repair at an independent garage. They argued the claimant should minimize his costs (mitigate the losses). This is not the case. See the section on mitigation.

Third party cover: About 10% of policies issued are third-party policies. These provide the minimum cover to meet the requirements of the National Traffic and Motor Vehicle Safety Act 1966 (Pub.L. 89–563). They protect you against liability to other people (third parties), but won’t cover any of your own personal losses. In that event, if you are the non-fault driver, you must recover from the at-fault insurer.

Towing and storage charges: These are incurred for towing a vehicle from the accident scene to the garage. The garage will then charge storage for the vehicle. In certain situations, there’s a direct relationship between the police and nominated vehicle recovery companies, who’ll pay the police a referral fee. These charges can be significant. If your car is drivable at all, you should drive it home and park it. As soon as possible let the at-fault insurer know where you’re keeping it in case they want to inspect.

Uninsured losses: These are the losses you incur even if you have comprehensive insurance. They’re typically the insurance excess, loss of earnings and damages for personal injury. Where you’re insured only third party, they will also include repairs and higher costs. Where you’re the non-fault driver, you are legally entitled to be reimbursed for these uninsured losses.

Voluntary Excess / Motor Excess Insurance: You can take out a separate policy to cover the cost of your excess. The idea is by agreeing to a significant voluntary excess making you’ll get a reduced premium. You can then take out a separate policy for that excess for costs which will probably cost you between $40-$60 a year. This means you’ll pay the garage the cost of the excess, your own insurers will pay the rest of the repair costs, and you’ll recover the cost of the excess from the separate excess insurers.

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