Insurance Essentials


If you drive a vehicle on public roads, you have to be insured. If you’re not, you risk receiving a fine or even losing your car. Here’s what you need to know about getting your vehicle insured.The law says that drivers must have insurance against third party injury or damage claims. This means that if you were to injure someone else or damage their property, you would have insurance to cover the claim. The law also says that the insurer must provide a certificate of motor insurance as evidence that you have insurance.

Different types of motor policy
  • Third Party - Gives you the minimum cover you need by law - third party liability risks. It means that if you cause an accident, the cost of damage to other vehicles, the cost of compensating someone you have injured or the cost of damage to someone’s property is covered. With third party insurance, damage to your own car will not be covered; nor will you be able to claim if your vehicle is stolen.
  • Third Party, Fire and Theft - In addition to the protection given by a third party policy, this covers loss or damage to your own car as a result of fire, theft, or attempted theft. Damage caused to your own car in an accident will not be covered.
  • Comprehensive – This is the widest form of cover available, although it cannot protect against every conceivable risk. The main benefit is that it will pay for repairs or the replacement of your car if it’s damaged or stolen. A comprehensive policy includes personal accident insurance providing payments for death and specified serious injuries such as the loss of a limb or sight, cover for your in-car audio systems, windscreen replacement, roadside assistance, and the cost of a replacement car if your car is put out of action.
Calculation of premiums
The cost of premiums varies widely, depending on the risk involved. It is calculated by looking at the following factors:
 
Type of car
Insurers will consider factors such as the cost of body parts, how easily the car can be repaired, its value when new, its top speed, its acceleration and how difficult it is to steal.
 
Sports and high performance cars are more expensive to insure because statistics show that they are involved in more accidents and that repairs are more costly than with other types of cars.
 
Drivers
Information about drivers affects the premium significantly. Important factors include age, driving experience, occupation, accident record and history of convictions.

If you have previous convictions, especially for a motoring offence, you have to declare it when you apply for insurance cover. It’s important that you’re upfront with the insurance company before you sign up for a policy. If you’re not, they could turn down your claim or declare your insurance void. This means you’d be driving illegally.

Use
Most insurers recognise two common classes:
  1. Social, domestic and pleasure. This is the standard cover that most people buy if they don’t use their car for their business. It also covers you for trips to and from work.
  2. Commercial travelling. This would give you social, domestic, pleasure and business cover, but would also insure you if you are a sales representative or are delivering goods.
No claims discount
 
Motorists who go for a year or more without making an insurance claim qualify for a No Claims Discount off their basic premium.  The first claims-free year earns you a reduction of around 20%. This discount rises, year by year, to 60% or 65% after four or five years.
 
If you claim on your policy you may lose some, or all, of the discount. It doesn’t matter whose fault the accident is because the discount relates to the fact that you haven’t made a claim and not to the fact that you haven’t had an accident that’s been your fault.
 
The excess
 
The excess is the first part of the claim that you have to pay. The excess level can vary but one way to reduce the cost of your premiums is to take a higher excess.
Compulsory excesses are different. These are often imposed, for example, on learner drivers or those who are young, inexperienced or have a poor claims record.
 
This article is for information puposes only and was brought to you GasanMamo Insurance Limited which is authorised to carry on business of insurance in Malta in terms of the Insurance Business Act 1998, regulated by the Malta Financial Services Authority. Company Registration Number: C3143
 
Head Office : GasanMamo Insurance Ltd, Msida Road Gzira Malta. Click here  to view a map and visit their head office, branches and other tied insurance intermediaries locations.