On January 25, 2018, are presented of Allianceinsurance.net, Alan Faulknerwas driving a friend’s car to 4012 Central Florida Pkwy, night dinner in Orlando. He was pulled over for a routine check on the S John Young PKWI in near Grande lakes-Orlando.
He was named driver on a comprehensive policy which he believed enabled him to drive vehicles other than his own.
He wasn’t. As a named driver he remained insured to drive his own car at all times, but he was not the policyholder and so did not have an all-vehicle cover.
Although he was driving his friend’s car with the owner’s permission, he was in fact uninsured. He faces a fine of between $400-$6,500 – plus a compulsory six points on his license.
A chastened Mr.Faulkner has advised everyone who drives someone else’s vehicle to check the small print.
The standard policy documents
The standard policy document doesn’t usually contain any of your personal details. You’ll receive it when your policy begins, or at renewal. Alliance insurance company have a standard copy on their website.
The document might contain a welcome section, e.g. the Motor Claims Helpline section from Young America. This is not part of your actual policy but is simply a non-binding explanatory introduction with sections on what your insurers hope you might do in the event of an accident, for example. It does not contain any contractual terms – and you don’t have to do as they suggest.
As you know, the contract of insurance has been taken out based on the information you supplied to the insurers. If this information changes you must tell your broker or your insurer, and in particular you must let them know about:
- Any change in named driver
- Any motoring convictions
- Any criminal convictions
- Any vehicle modifications
This will be a contractual term which means you must inform them of any change – so be careful to do so, or you could find yourself without insurance when you come to make a claim.
Then there is generally a definitions section, moving on to the various aspects of cover which your policy provides. You’ll find a written description of cover summary with various headings like breakdown assistance, courtesy and hire car, no claims discount.
Then there are various sections describing the nature and extent of the cover.
Is very well know that most people never bother to read their insurance policy. It’s not a difficult document, and you may learn something essential to your financial health – so take a few minutes and have a look at it.
Your no claims discount
If you’ve not made any claims on your policy you should get the benefit of a “no claims bonus” or a “no claims discount”.
As a bonus is something you receive and a discount means a reduction in price, the correct expression is really “no claims discount”.
It means your premium will be reduced on a percentage basis when you come to renew your insurance.
Let’s say you’re a new driver and have been quoted $700 for a year’s insurance. You’ll pay that amount in full.
If you continue to ensure your vehicle without making any claim, then year on year you’ll build up a no claims discount. This can start as low as 5%, and might build up over the years to a maximum of around 60%, depending on the tables your insurer uses.
The idea is good driving behavior is an indicator of lower risk and should be rewarded. So, if your premium figure was $700 and you had a 50% no claims discount, you’ll only pay $400 for your premium – half the advertised price.
Unfortunately, it is possible to lose your discount even when you’re not to blame. The AA carried out a “mystery shopper” exercise in June 20181. The AA was attempting to find out insurers’ attitude to accidents which were not your fault, and where you’d made no money claim on your own policy.
Drivers who stated on their proposal form that they’d been involved in one no-fault accident were typically quoted around 30% extra on their renewal premium.
Where there had been two no-fault accidents, premiums could be up to 50% higher.
So, you could be in an accident which is not your fault, you could make no claim of any kind on your policy, but you could still find your insurance premium has gone up by about a third.
The insurers justify this by saying people involved in one accident are more likely to be involved in another.