Van insurance - the basics
As motor insurance is a legal requirement and given that while driving you can be stopped
and asked to prove that you are driving with insurance, you naturally must have some form
of proof or documentation that you have valid cover. This is supplied to you by your
insurer once you have taken out a policy with them.
- A certificate of insurance.
- A schedule and/or policy document.
- A cover note.
A certificate of insurance is evidence of insurance as required by the Road Traffic Act.
This is the document you will be asked for, should you be required to prove your current
valid insurance. The schedule and/or policy document is different from the certificate
in that it sets out the full the terms and conditions of your insurance policy. Finally,
the cover note acts as a temporary certificate for the purposes of the Road Traffic Act.
A cover note would usually be issued to allow either a broker or insurer time to complete
their paperwork before they issue the full certificate, though this practice has, over
time, become less and less frequent.
You should always read your policy to make sure that it gives you the level of cover
you agreed with your broker or insurance company. If there is any part of the document
you are unclear about or wish to clarify then contact your broker or insurer; they
should be more than happy to explain any queries you have about the language or terms
shown. Should you attempt to make a claim for something which is not shown or covered
on the policy or is noted as an exclusion, the insurance company is well within their
rights to refuse to pay your claim.
One thing to note about insurance contracts which is very important is that you are
required to inform the broker or insurance company everything you believe to be relevant
or important; about you, your driving history, claims or convictions etc. Literally
everything that relates to you as a driver or road user, as any information that is not
shared that later becomes apparent during a policy term could invalidate the cover that
you have. Unlike many situations where a contract is agreed upon where you are required
to only answer or inform based on the questions that you are asked, motor insurance
falls under 'utmost good faith' requiring you to inform them of any relevant
information whether you are asked or not.
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Most policies will feature key exclusions. These will be outlined in your policy
documents, and will highlight all of the areas that your policy will not cover,
for example: driving other vans. Other exclusions could be protected no claims bonus,
or windscreen cover. Please make sure you check all exclusions on your policy documents,
so that you are aware of all limitations.
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Driving other vans allows third party only cover on another vehicle; providing the
van is currently insured by another party, and you have the owners' permission to drive.
If your motor insurance permits driving other vehicles, it is only applicable to vehicles
not belonging to the policyholder and not hired to him under a hire purchase agreement.
There are a number of insurers who have removed this feature due to the cover being misused.
It appeared that some drivers were insuring small vans but using the ‘driving other vans'
facility to drive far more powerful vehicles The whole idea of this cover being available
was for emergency cover use only, as driving without any insurance cover is illegal.
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An excess is your contribution towards any claim.
Let's say you have a claim for accidental damage, and your accidental damage excess is
£100. If the cost of the claim is £500 you will contribute the first £100
of the claim leaving your insurance company to pay the remaining £400 (£500
claim minus £100 (your excess) leaves £400 outstanding). It goes without saying
that if you have a £100 excess and your claim is worth less than £100 then there
is little point approaching your insurer as your excess would cover the total damage cost.
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When you take out a policy with an insurance company you will have the opportunity to
contribute towards any claim. While you may think this is identical to a compulsory
excess, a voluntary excess is the amount you agree to contribute on top of your compulsory
excess. Let's say you choose to have a £150 voluntary excess on your policy, the
policy itself may already have a £350 compulsory excess so dependant on what type of
claim you have, you may find your total excess payable is £500.
The benefit of a voluntary excess is that generally the more you agree to pay towards
a potential claim the cheaper the premium will be - however you need to look at the
savings carefully. On the other side of the coin, it may cost you £300 to insure
your £10,000 car, and you are offered a £50 reduction if you forego choose
a £250 voluntary excess. This is £250 you could be paying instead of £50.
All in all, you need to weigh up the final cost to you. Pay a higher excess and get a
cheaper premium, but risk paying more if you need to claim; or pay a lower excess with
a higher premium and have less to pay if you make a claim. Only you can decide what is
right for you.
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In addition to any voluntary excess you may have selected, you may be asked to pay a
compulsory excess towards any claims on your policy, though there are some policies
which may have nil compulsory excess. Compulsory excesses will more than likely be
found on policies where there is a young driver or a high value vehicle.
Although you may see an excess as a downside, if you consider that by contributing towards
a claim it allows the insurer to lower the costs of their premiums. By minimising the
potential for lots of smaller claims, this reduces the workload of the insurer in both
employee and administration, allowing the insurer to save money which helps keep premiums low.
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The very minimum cover required by law in the UK is third party only. Third Party
Insurance will usually cover your liability for injury to others (including passengers),
damage to property and liability whilst towing a caravan or trailer. Third party insurance
will not cover you for accidental damage to your own vehicle. So unless you can afford to
repair the damage yourself or even scrap the vehicle and purchase another, you may want
to consider third party fire & theft or comprehensive cover.
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Third party fire & theft offers all that third party only cover offers, with the extra
benefit that should you suffer a loss through either fire or theft you will be entitled
to make a claim (Given, that you had made every practical effort to avoid theft or fire
damage).
As third party fire & theft offers less cover than comprehensive generally you will find
it costs less; however, many insurers are trying to convince customers to buy comprehensive
cover by making the difference in cost as minimal as they can, making the extra cover a
better buy.
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Fully Comprehensive Insurance covers you for everything third party fire and theft does,
but in addition you will normally be covered for loss or damage to your vehicle, windscreen
cover, personal effects, accidental damage and medical expenses too.
However, there is now a growing trend for insurance companies to offer comprehensive cover
which has been stripped down, or hold reduced cover so please ensure to check all policy
cover as you may find that windscreen cover has been removed or that your personal effects
cover has been greatly reduced.
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Did you know that you may not lose all your no claims bonus (NCB) if you come to claim.
For non-protected bonus many people believe that by claiming they will lose their entire
no claims bonus but generally this is not the case. The amount of no claims bonus lost for
a fault claim on a non-protected policy is two years. So if you have four years no claims bonus
then it would be reduced to two years. Another point to mention about no claims bonus is
that there is a maximum level of discount you can receive, so it may be that a company offer
maximum discount for five years no claims discount. So although you may have nine years continuous
claim free years, should you have a fault on a non-protected policy then you may well find
your no claims bonus reduced to three years. The extra years are simply a record of your driving
history and may well not offer any further discount. Different companies may well have
different maximum no claims bonus levels so this could be four or perhaps five years.
Once you have achieved the maximum level you should then be able to protect you no claims
bonus. If you have five years protected no claims bonus and you have a fault claim, your bonus
level won't be reduced. However, insurance companies don't just base their quotes or premiums
on the amount of no claims bonus you have, they will still look at your claims history. So
although the following year you will still receive the same maximum discount on your policy
due to the protection, your quote or premium may well be higher due to the new claim added to
your policy. Insurance companies see policies with claims as a greater potential risk than
claims free insurance policies.
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