To get the best value from car insurance quotes, it is important to understand the various terminologies included in your insurance policy. A thorough understanding of these conditions and catchwords will ensure that you are not caught off-guard in the event of a claim. It is important to remember that the point of car insurance is to offer a safety net in times of crises to ensure that you don’t need to dip into your savings account to replace or repair a vehicle.
In order for this safety net to work efficiently, it is important to recognize the various limitations, conditions and terms. Not only will this understanding offer you peace of mind, it will also ensure that you are educated on your insurance company’s various legal and practical procedures.
When it comes to car insurance quotes, most of us can feel a little overwhelmed by the many terms, conditions and buzzwords that appear in our insurance policies.
Few of us understand the jargon of the insurance industry and often find ourselves agreeing to terms that we do not fully understand in the hope of obtaining reliable and efficient vehicle insurance.
I compiled a list of 9 commonly used terms which will arm you with all the necessary information to assist in making a sound decision before singing on the dotted line.
1. Policy Schedule or Coversheet – When it comes to taking out reliable car insurance, you will be required to enter into a contract. This contract can be entered into via telephone, online or, in some cases, in writing, but by law your insurer is obliged to confirm the conclusion of the contract in writing within 30 days. This confirmation is in the form of a policy schedule (Coversheet) summarising all of the specific information of your insurance policy.
2. Claim – You submit/report a Claim to your insurance company when you have suffered a loss or damage to an insured item and you need your insurer to get you back into the same financial position you were in prior to the loss. The merits of your Claim will be validated – and based on the terms and conditions of the policy, the Claim will be accepted or denied (rejected) by the insurance company.
3. Excess – An excess is an agreed amount of money that the policyholder is liable to pay in the event of an insurance claim being settled. For example, if the excess on your car is $300 and the damages amount to $5000 your insurance company will pay the remaining $4700 once you have paid your excess to the repairer. Insurance companies charge an excess to assist clients in managing their risks by not claiming for minor incidents – as well as to ensure that customers do not submit minor or fraudulent claims. If the claimed amount is less than the excess, there would be no claim.
4. Perils – Perils refer to a variety of risks that can cause damage to your car. These include accidental and intentional damage, theft, hijacking, attempted theft or hijacking, fire or explosion, earthquake, storm, hail, flood or snow and glass damage.
5. Premium – A Premium is the amount of money that is paid upfront on an annual or monthly basis to ensure that your vehicle is covered. Your insurance Premium will increase or decrease depending on a variety of factors, referred to as underwriting criteria.
6. Retail Value – Retail Value is the average current selling price (on a dealer’s floor). If you were to insure your vehicle for its Retail Value, it would be insured for the value closest to the replacement cost. Although it is the more expensive option, it has a large number of benefits if anything had to happen to your car. It is also important to remember that the Retail Value of your vehicle decreases on a monthly basis.
7. Market Value – Market Value is the average between the vehicle’s retail and trade value. It is important to note that although you are paying less for your insurance, you are covered for a substantially lower value.
8. Trade Value – When searching for car insurance options, the most attractive deals are those that seem to be the cheapest. If you choose to insure your car for its Trade Value, it would be valued at the average price that a motor dealer will pay you for the vehicle. Trade Value is the lowest value.
9. Specially Agreed Value – This is applied to unlisted, vintage and collectors’ vehicles, caravans and trailers from an authorised source.
To fully understand the details of your car insurance quote, it is best to read through the documentation supplied by your insurance provider and use these definitions for your reference. Not only will this clarify the complexities of car insurance terminology, it will also ensure that you are up-to-date with that which you are covered for and the parameters thereof.