It can be hard to wrap your head around everything you need to know about car insurance, especially when every insurance policy out there is different.
However, there are a few fundamental things that you should know about car insurance, as knowing them could end up saving you a lot of money.
This article gets you up to speed on four things you probably didn’t know about car insurance.
Third party insurance does not cover you or your vehicle
As the most fundamental form of insurance, third party insurance provides the minimum coverage required by law, and ensures that the person insured is covered for their liability to third parties for property damage, bodily injury, or death.
If you’ve got third party insurance, the most important thing to be aware of is that, in the event of an accident, this type of policy will only cover damages to another person or their vehicle, and will not cover the costs of personal bodily injury to you or the costs of repairing your vehicle.
Although the premiums attached to third party insurance are lower than comprehensive car insurance, the limited coverage offered means that you may risk being liable to a mountain of costs in the event of an accident.
As such, opting for a comprehensive car insurance policy that also provides personal accident coverage may just pay off in the long term.
Your No Claims Discount is transferable
As you are probably aware, a No Claims Discount (NCD) is a discount applied to your car insurance when you go for a period of time without filing any claims.
Building up your NCD over a few consecutive years can amount to significant savings on your car insurance premium, which is why many people will try to stick to the same insurer in order to maintain their NCD without knowing that the discount is actually transferable.
The fact is, NCDs are indeed transferable with many plans, so you can actually keep the NCD that you have accrued even if you switch plans, provided that you show the required proof of your NCD, which is usually given to you by your insurer when you reach the end of your policy term.
Please note that not all insurers will let you transfer your NCD, so it’s always important to double check before you switch policies.
It’s possible to lend your car to a friend or family member
In the US and in many other countries, there’s no law against lending your car to a friend or family member.
While it can be unnerving to lend your car to somebody else, most policies will retain coverage on the vehicle even when someone else is driving it, as long as the conditions stated in your policy are met (e.g. provided that the driver you are lending your car to has a valid driver’s license).
This is because the condition of permissive use applies to car insurance, meaning that it is allowed for you to let someone else drive your car.
However, one thing to be aware of when lending your car is that your insurance will be covering the vehicle, so if a crash occurs, you would have to file the claim and accept any resulting premium increases.
Another thing to consider is that, although lending your car to a friend occasionally is fine, if an insurer finds out that a regular driver of your car is not listed in your policy, they can and will end your coverage.
Insurers can terminate your coverage at any time
Almost all insurance plans have clauses within them that allow the insurer to terminate coverage at any time, even if it’s before the contract’s end date.
Of course, this doesn’t mean that they can just cancel your coverage for no reason whatsoever, as the policy will specify a number of conditions that need to be met before an insurer can end your coverage.
Typical reasons for coverage termination include failure to pay premiums, or being found to have deliberately caused an accident or committed fraud.
Kwiksure is one of Hong Kong’s largest providers of motor insurance policies, and our advisers are here to help you find the right coverage for your car, along with a great rate. If you need help looking for car insurance, be sure to contact us today for a free quote!
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Category: Car Insurance