Let’s face it - the continuously rising cost of car insurance takes a big portion of the household budget. The temptation to simply get the cheapest option available is difficult to pass up. However, it should be kept in mind that this should not be done at the cost of acquiring the right type and level of cover. It is essential that you should think carefully about your driving needs, type of vehicle, risks involved and make sure that you get the right kind of cover that suits your needs, and does not get any vicious surprises when you are in need. There is no situation worse than being caught out by the small print of a cheap car insurance policy. Some common pitfalls to look out for are described in the following paragraphs.
Insurance companies pay the “fair market value” of a car at the time of an accident in cases where it has to be written off after an accident. The value of a new car depreciates very quickly, and many people are shocked when they are offered much less by insurance companies than they believe its true value to be after an accident. Many disputes arise over the value of a car, so some insurers have now started to find matching write-offs and base their pay-outs on this, instead of paying the market value. Check to see if this is suitable for you.
There is a very big drop in the market value of a car immediately after purchase, and if a car has to be written off within the first year of being bought, it could leave owners very heavily out of pocket. So, additional insurance to cover this gap may have to be considered.
You would think that having personal possessions cover in a policy would mean that if a car is broken into, then the personal belongings stolen would be covered. However, chances are that the broken window will be paid for by the insurer, but the amount for personal belongings will most likely be a very low amount. Once the excess that has to be paid before the claim is settled and factored into the equation, the compensation paid out will in most cases be so low that it will not even cover the cost of a new coat! If you’re forgetful and have a habit of leaving expensive things in the car, then remember to check the personal possessions cover limit.
Some insurance companies do not pay a claim if they feel the car is stolen as a result of deception. An example would be if you sell a car and allow the buyer to drive away and later find out that the payment was a fake. While most people would consider this a theft, insurances companies hold the view that the car owner was not responsible in their obligation to protect the car. Make note of the theft by deception clause in the small print of the policy, if this is an issue.
If a car is stolen
as a result of keys being left in the car, or windows not
being locked or any security device that has been declared
to the insurer not being turned on, the insurance company
will most probably refuse the claim. Insurance companies
feel that the car owner has an obligation to protect the
vehicle and if they are negligent, then there is no claim.
Copyright Maureen Davey 2014 All Rights Reserved