Buying Insurance.

Buying Insurance

Buying insurance is an emotional topic- and a baffling one. The market is highly competitive. The premiums vary enormously-as does what is included (apart of course from the essential basic cover). Is it better to buy from a broker, insurer direct or others such as consolidators?

Choice of Seller

All things being equal, who you buy from is probably secondary to what you get for your money. We have already said in our basic insurance article that nowadays many brokers have extensive delegated powers for the underwriting insurers making the distinction blurred. Consolidators on the other hand are organisations such as confused.com who seek to cut their overheads to the bone and are almost a sales only organisation.

How Do I Choose?

Here we mean which seller rather than what the deal is at the end of the day.  We could be inviting litigation if we came out and what we think in reality. Suffice it to say that our own preference is for suppliers who have proved themselves. Nobody is perfect but some have been around longer than others and some have taken the trouble to look at the needs of the biking world. Some have gained a larger sector of bike insurance than others and become household names. By and large they do not achieve that status without doing something good. All we say is “a nod’s as good as a wink”. Take note of our website!

Other Factors in Choosing

We accept that for most, price is the most prevalent determining factor. But don’t be totally blinded by this.  Other factors will inevitably rear their heads:-

  • How good is the broker / underwriter on the paperwork?
  • Are there any hidden extras
  • What happens if I have a claim
  • What happens if I have an accident
  • What if I want to extend my cover
  • Do they really understand bikes
  • What is their reputation like in the market place

The Proposal Form

This is the document that you complete for the proposed insurers setting out the vital information they need to decide whether to insure you. Apart from name, address and bike to be covered they require your past history -in fact everything they need to decide whether you are a good risk for them. In this connection you have a very important duty of utmost good faith.

Duty of Utmost Good Faith

All types of insurance and assurance carry the duty of good faith (or for the classicists “uberrimae fidei”).  In other words you must disclose anything that would likely affect their decision whether are not to insure you. For example driving

or other convictions. The insurer is concerned to know whether you are a good risk.

Remember that this duty is a continuing one and not just applicable at the time of renewal (although you will often be reminded of your duty at annual renewal)

Documentation

As a result of buying motor insurance you should receive as a minimum the following pieces of paper:-

  • Cover Note
  • Policy
  • Summary of your policy
  • Certificate of Insurance

Cover Note

This is merely a temporary document showing that you satisfy the basic legal requirements for motor insurance. You need it of course for such things as road tax. But it is temporary whilst the insurers consider and process your proposal. There is no duty on the insurers to accept you fully as a policy holder. The terms on which you hold a cover note could well be different to the main policy when it comes.

Policy Document

This is the main document setting out the terms and conditions upon which you are insured. As such, although a pain, it needs to be read and understood using the policy summary as a guide.

Policy Summary

This document rejoices under different names depending on the insurer. Variously known by such names as Key Facts, it should satisfy the requirements of the Financial Services Authority (FSA) in setting out the more salient parts of your policy in plain English (or equivalent translations).

Certificate of Insurance

This “official” document for production to the authorities confirms the basis of your compulsory road traffic act cover.  It is needed for such things as production to the police and obtaining road tax.

What Bike is Covered

Those of us old enough to remember will recall the excellent Norwich Union Rider Policy whereby you could own several bikes at once – at a price of course. All would be covered and you could use them alternatively. Unfortunately this extremely useful policy has now long gone. Most bike insurance is specific to an individual machine and requires you to contact the insurers to effect any swop.

Your Financial Liability

Apart from agreeing to pay the premium (either in one lump sum or by instalments), you will clearly not be able to reclaim or have payment waived for any period that the insurer is deemed to have you on cover. But generally, if you have to cancel then you will get a refund for the unexpired proportion. This also applies if the insurer decides that you are not a good risk and refuses to continue your cover. But any refunds may be subject to the deduction of such things as an administrative charge. So do read the small print.

Your Financial Security

Fortunately, not too many insurers go bust. But it has been known. One of the most recent was the Independent.  Generally the industry is fairly well regulated by the FSA. An insurer going out of business has two main consequences. Firstly the consumer has to find another insurer and another premium. Secondly any claim that is pending has to be diverted elsewhere. Under FSA regulations, most if not all, of the consumers premium is repayable. Further no one should find themself without cover for accidents. Clearly following the confusion of the company going out of business, it may take a little time for things to get sorted. So it may be simpler to claim on your credit card if that is the way you paid. Provided you have a credit card (note not debit or charge) where you have ongoing credit then they are duty bound to take up the matter. In the case of the Independent Insurance Company, it was in fact to the credit of a well known biking broker (who put money in themselves) that their customers suffered as little as possible.

Hidden Extras

Sellers of insurance operate in a highly competitive market. It is therefore not surprising  that they will “dress up” up their deal and quote the most competitive figures. We do not baulk against this- provided extras like administration or credit charges are transparent. For example will your broker charge you for temporarily extending cover to you European holiday or for switching bikes?  Be aware and read the small print.

This material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.

More Help Needed?

Phil Shuker

MD Bikers Advice

Tel: 01706 227419

Email: phil@bikersadvice.com

All Articles © 2017 Bikers Advice