What does Motor Insurance Do?

What does Motor Insurance do?

Motor insurance protects motorists against liability in the event of accidents they may cause. It can also provide cover for the motorist’s own vehicle. Many different types of cover are available, ranging from third party cover which protects individuals against liability should they injure a third party or cause damage to a third party’s property, but does not provide any cover for the individual’s own vehicle or property, through to comprehensive cover, which can offer protection for accidental damage, theft, fire damage as well as liability towards third parties.

The Road Traffic Act requires all motorists to be insured against their liability for injuries to others (including passengers) and for damage to other people΄s property resulting from use of a vehicle on a road or other public place. It is an offence to drive your car or allow others to drive it without insurance.

When you purchase Motor Insurance, your insurer will usually issue two documents:

The Certificate of Insurance - this is evidence of insurance as required by the Road Traffic Act.

The Policy Document - sets out in full the terms and conditions of your policy.

You may also receive a Cover Note. This acts as a temporary policy and also as a temporary certificate of insurance for the purposes of the Road Traffic Act.

You should read your policy carefully to ensure it gives you the level of cover you are seeking. There should be no small print or difficult language in modern insurance policy documents. If you are unsure about what the policy does or does not cover then just ask your insurer/insurance adviser to explain.

Comprehensive Motor Insurance Policies usually cover:

• Liability for injuries to other people, including passengers
• Liability for damage to other people΄s property
• Liability of passengers for accidents caused by them
• Liability arising from the use of a caravan or trailer, while attached to the car
• Fire damage and/or theft
• Accidental damage to your own car
• A personal accident benefit - certain amounts are paid in the event of the death or specific permanent disablement of the policyholder (and sometimes his or her spouse or family member)
• Medical expenses necessarily incurred, up to a stated limit
• Loss of or damage to personal effects in the car, up to a stated limit.

Third Party Insurance Policies usually cover:

• Liability for injuries to other people, including passengers
• Liability for damage to other people΄s property
• Liability of passengers for accidents caused by them
• Liability arising from the use of a caravan or trailer, while attached to the car

And Third Party Fire and Theft Policies are generally the same as Third Party policies, but with protection added to cover losses in the event of fire or theft of your vehicle.


Is there anything I should ask or think about when buying motor insurance?

Policy Limits and/or Excesses - Make sure you are aware of any applicable excess and/or cover limits your policy may include. An excess is the first portion of a claim you will be responsible for paying and the insurer will only pay out on the amount above the excess. There may be a number of different excesses in one policy. For example, different excesses might apply depending on whether a claim is for accidental damage or theft. There is usually a separate excess for windscreen replacement claims. Most insurance policies also have maximum limits the insurer will pay out in a claim. You need to check you would be able to afford the excess in the event of a claim, and that the maximum insured would be sufficient to cover your loss.

Insured Drivers - The policy might only cover driving by yourself or specified people, or it might allow driving by any qualified person with your permission, possibly over a certain age limit. Your insurers will want to know about anyone who is likely to drive - particularly their age, experience, claims and driving record and occupation.


Vehicle use - Your policy and certificate set out the uses for which your car is insured. For example, if you or any authorised driver want to use your car in connection with work, make sure that your policy covers this.

No Claims Discount - Policyholders with a claim free (not blame free) record normally qualify for a premium discount. Scales vary from one motor insurer to another but can range from 30% for one claim free year up to 60% or more after four or five years.


Protected Discount policies - are often available, for example, to policyholders who have a good claims record. For an extra premium, a number of claims are allowed without affecting the discount. Typically two claims are allowed in a three to five year period. Your insurance premium or your excess may be affected, however, even though your discount is protected, if you build up a poor claims record or receive driving convictions.

Guaranteed Asset Protection (GAP) insurance - gives you added protection if your car is written off. If you have used a finance agreement to buy your car, GAP insurance pays out the difference between the car’s pre-accident value and your outstanding loan. Some products may also pay for the cost of replacing your car with the current equivalent or provide a deposit to help you buy a new one. And, even if you haven’t taken out a loan, other types of GAP insurance pay out the difference between original purchase price and the car’s pre-accident value.


Motoring Abroad
If you are taking your car abroad you should talk to your insurers about extending your cover if you want more than the minimum legal requirement in each country. You should also investigate getting the internationally recognised proof that you are insured. This is called a a Green Card. There is also a European Accident Statement which could help if you have an accident and have difficulties with the local language. For more information see the document on the right hand side of this page.