Private and Commercial Motor Insurance

Question 1

Private motor insurance is the most significant compulsory insurance in the UK.

Answer 1

True

Private motor insurance

Question 2

It is illegal to drive or be in charge of a vehicle on a public road unless an insurance policy is in force.

Answer 2

True

Private motor insurance

Question 3

The policy must cover: the driver’s legal liability for injury to others and damage to their property.

Answer 3

True

Private motor insurance

Question 4

There are four different levels of cover available, with the lowest level being the most restrictive and extra areas of cover added for each level.

Answer 4

True

Private motor insurance

Question 5

The following figure shows these in ascending order of the level of the cover provided.
Figure 2.1:

Answer 5

1. Road Traffic Act only.
2. Third Party only
3. Third Party, fire and theft
4. Comprehensive.

Question 6

Increasing cover
It is worth noting that there are other levels of cover, such as ‘fire and theft’ and ‘off-road’. Whilst uncommon, these provide a different level of cover for specific circumstances.

Answer 6

True

Private motor insurance

Question 7

Road Traffic Act only is the minimum cover required to comply with the Road Traffic Act 1988 (as amended)

Answer 7

True

Road Traffic Act 1988

Question 8

Road Traffic Act in Private motor insurance covers::::

Answer 8

unlimited indemnity in respect of bodily injury or death to third parties;

a £1,200,000 limit for loss of or damage TO THIRD PARTY PROPERTY (this complies with the FIFTH EU MOTOR INSURANCE DIRECTIVE 2005);

claimants’ costs and expenses; and

emergency medical treatment and hospital charges arising out of the vehicle use.

Question 9

In accordance with the Third EU Motor Insurance Directive 1992, motor insurance policies issued in the EU must provide cover for the vehicle to be used in any other EU country.

Answer 9

True
(RTA in Private Motor Insurance ,
complying with the Third EU Motor Insurance Directive 1992,)

Question 10

This cover must be the minimum cover required by either the country visited or the country in which the vehicle is kept, whichever is the greater.

Answer 10

True
(RTA in Private Motor Insurance ,
complying with the Third EU Motor Insurance Directive 1992,)

Question 11

Also cover for injuries to employees of the insured when travelling as passengers in the course of employment.

Answer 11

True

RTA in Private Motor Insurance

Question 12

Very few of this type of policy are issued as it is similar to the next type of coverage and most consumers will require more extensive cover than is provided here.

Answer 12

True…..

Road Traffic Act insurance in Private Motor Insurance

Question 13

Indemnity to user?

Answer 13

the insured may allow others to use the vehicle for social, domestic or pleasure purposes.

Question 14

Third party cover for the vehicle whilst being used in any country that is a member of the European Union.
When the UK leaves the EU (with or without a deal) policyholders will require proof of cover known as :

Answer 14

a ‘Green Card’, from their UK insurer in order to drive in any European Economic Area (EEA) country.

Question 15

There are two specific exclusions:

Answer 15

damage to the vehicle itself (regardless of whom was driving it); and

liability covered by another policy (e.g. when driving someone else’s car, cover may be provided under that car owner’s insurance).

Question 16

Third party, fire and theft includes, in addition to the above:

Answer 16

the cost of repair or compensation to the insured if the vehicle is stolen or damaged during theft or attempted theft;

damage by fire, lightning or explosion.

Question 17

the cost of repair or compensation to the insured if the vehicle is stolen or damaged during theft or attempted theft; is which type of motor insurance policy?

Answer 17

Third party, fire and theft

Question 18

Damage by fire, lightning or explosion, is which type of motor insurance policy?

Answer 18

Third party, fire and theft

Question 19

The same exclusions apply here as to third party only. In addition, to :

Answer 19

‘loss of use’

Third party, fire and theft

Question 20

The extra expense to the insured of having to use alternative transport whilst their car is out of action is specifically excluded.

Answer 20

True..

(Third party, fire and theft)

Question 21

Some policies may include a benefit to include cover for a hire car if the subject vehicle is stolen or damaged by theft.

Answer 21

True..

(Third party, fire and theft)

Question 22

Comprehensive cover is the widest possible protection and includes any accidental or malicious damage to the insured vehicle.

Answer 22

True

Comprehensive cover

Question 23

The cover is ‘all risks’, in (Comprehensive cover) i.e. all loss or damage is covered , with the following exclusions:

Answer 23

wear and tear;

depreciation;

loss or damage to spare parts and accessories unless on the vehicle or in the insured’s garage;

loss of use (though this can sometimes be purchased as add-on cover, usually in the form of a hire car);

mechanical and electrical failure; and

tyre damage from punctures or blow-outs.

Question 24

• joint insured clause or cross liabilities clause

Answer 24

(i.e. two or more named insureds are treated as separate policyholders if one has a claim against the other);

Question 25

A comprehensive policy may also extend cover for the policyholder to drive a vehicle not belonging to them, so long as it is not hired to them under a hire-purchase agreement.

Answer 25

True.. | Comprehensive cover extension

Question 26

This cover only extends to third party liability and does not include damage caused to the vehicle being driven.

Answer 26

True.. | Comprehensive cover extension

Question 27

The policy may also extend to include personal accident, medical expenses and personal effects.

Answer 27

True.. | Comprehensive cover extension

Question 28

Comprehensive cover only extends to :

Answer 28

Third party liability

Question 29

This extension (driving other vehicles in (Comprehensive cover extension) does NOT cover damages caused to the vehicle.

Answer 29

True.. | Comprehensive cover extension

Question 30

Extensions to a motor policy are widely available, and may be included as part of the core product or offered as additional add-ons for a slightly increased premium (or a combination of both).

Answer 30

True.. | Private Motor Insurance cover

Question 31

A number of extensions in cover that are included without additional cost.

Answer 31

True.. | Private Motor Insurance cover

Question 32

personal accident; medical expenses; personal effects; and USUALLY a ‘drive other vehicles’ extension by the insured only, which is restricted to third party only cover or even Road Traffic Act only cover.

Answer 32

True.. | Private Motor Insurance cover

Question 33

The cover under personal accident, medical expenses and personal effects is very limited and should not be likened to stand alone policies of the same nature.

Answer 33

True.. | Private Motor Insurance cover

Question 34

Cover will automatically include the driving-other-cars extension but this is subject to other policy restrictions (e.g. age of driver)

Answer 34

True.. | Private Motor Insurance cover

Question 35

Usually only provide cover for the minimum that insurer offers (e.g. third party only)

Answer 35

True.. | Private Motor Insurance cover

Question 36

*Many motor policies contain benefits for personal accident as standard, but legal expenses cover is often offered as an added extra, in return for an increased premium.

Answer 36

True.. | Private Motor Insurance cover

Question 37

Examples of the optional extensions available include:(Private Motor Insurance cover)

Answer 37

additional personal accident benefits; * breakage of glass (on a non-comprehensive policy – it is usually covered by a comprehensive policy); * breakdown cover (for instance the provision of helplines or a certain amount of cover for the costs of roadside assistance) * caravans and trailers (usually third party cover whilst attached to the insured vehicle); * foreign use, that is the provision of cover over and above the minimum required by the EU Directives; * joint policies. * legal assistance; * loss of use at a fixed amount per day or the provision of a courtesy/hire car; * personal belongings and clothing (in addition to the limited standard cover provided by a comprehensive policy); * young additional drivers (these may be added as occasional users, but if they are one of the main drivers then the additional premium charged would be based on their age and experience); * racing, competitions, rallies and trials;

Question 38

There will be general and market exclusions in addition to the specific exclusions. exclusions such as:

Answer 38

contractual liability, riot and civil commotion; sonic bangs (i.e. damage caused by pressure waves from sonic/supersonic aircraft or other aerial device). terrorism use other than as specified in the certificate of insurance war risks;

Question 39

Motorcycle insurance includes any mechanically propelled cycle, and is also subject to the Road Traffic Act provisions.

Answer 39

True | Motorcycle insurance

Question 40

The policy format is the same as that for private motor insurance, with the following differences

Answer 40

True | Motorcycle insurance

Question 41

Usually no automatic cover for theft of accessories or spare parts unless the motorcycle is also stolen

Answer 41

True | Motorcycle insurance

Question 42

The liability section generally indemnifies the insured or their personal representatives in the event of their death) and others who were permitted to drive the motorcycle or who used it for social, domestic and pleasure purposes

Answer 42

True | Motorcycle insurance

Question 43

No personal accident, medical expenses (beyond emergency treatment fees) or personal effects cover.

Answer 43

True | Motorcycle insurance

Question 44

The policy exclusions are essentially the same as for private motor insurance.

Answer 44

True | Motorcycle insurance

Question 45

Accessories or spare parts is an extension covered for an additional premium

Answer 45

True | Motorcycle insurance

Question 46

Trailers is an extension covered for an additional premium

Answer 46

True | Motorcycle insurance

Question 47

Driving other cycles is an extension covered for additional premium

Answer 47

True | Motorcycle insurance

Question 48

More than one cycle is an extension covered for an additional premium True

Answer 48

True | Motorcycle insurance

Question 49

Invalid carriages is an extension covered for an additional premium

Answer 49

True | Motorcycle insurance

Question 50

Commercial vehicles is a form of commercial insurance:

Answer 50

True | Commercial motor insurance

Question 51

The main types are: goods-carrying vehicles; agricultural and forestry vehicles; and passenger-carrying vehicles; special construction vehicles, e.g. ambulances, cranes, fork-lift trucks.

Answer 51

True | Commercial motor insurance

Question 52

The insurance is PRIMARILY concerned with the risks that attach to the vehicles themselves whilst being driven, parked or carried by sea or air within the UK.

Answer 52

True | Commercial motor insurance

Question 53

There is UUALLY a standard policy wording, which is then modified depending on the type of vehicle insured.

Answer 53

True | Commercial motor insurance

Question 54

The range of cover is largely the same as for private motor insurance.

Answer 54

True | Commercial motor insurance

Question 55

The cover (Commercial motor insurance) varies from it (private motor insurance) in that certain benefits are excluded,

Answer 55

e.g. driving other cars, | personal accident and personal effects cover.

Question 56

The third party liability section provides unlimited indemnity for death or bodily injury to third parties. There would be a limit of, for example,

Answer 56

£5m for third party property damage. | Commercial motor insurance

Question 57

What does this enable the underwriter to do?

Answer 57

limit the level of its liability on a case-by-case basis, depending on the nature of vehicle insured and goods carried.

Question 58

Loading or unloading cover?

Answer 58

for third party liability can also be applied to accidents whilst loading and unloading.

Question 59

Indemnity to driver?

Answer 59

USUALLY anyone may drive on the insured’s order or with their permission.

Question 60

There is a fairly extensive portfolio of optional extensions available at an additional premium. (Commercial motor insurance)

Answer 60

e.g. medical expenses, windscreen cover, loss of use etc.

Question 61

Often included or are available as extensions of cover.

Answer 61

True | Commercial motor insurance extension

Question 62

the cost of commercial vehicle windscreens can be very high indeed and there may be a limit on the policy. Think about the size of a windscreen on a large articulated lorry;

Answer 62

True | Commercial motor insurance extension

Question 63

loss of use (cover for costs of alternative arrangements while the vehicle is being repaired);

Answer 63

True | Commercial motor insurance extension

Question 64

Increased third party property damage limit; this is especially relevant for :

Answer 64

large special type vehicles, such as earth movers and cranes which could potentially do a lot of damage as a result of their size and the nature of the work undertaken;

Question 65

personal belongings is relevant in ((Commercial motor insurance extension))

Answer 65

for long-distance lorry drivers who spend several nights on the road and may carry reasonable values of personal effects which could be lost in the event of serious accident, fire or theft;

Question 66

Indemnity to hirers;

Answer 66

where some companies often hire out commercial vehicles either on a regular or infrequent basis.

Question 67

Limitations are typically the same as for private motor insurance....

Answer 67

True | Commercial motor insurance extension and Private motor insurance

Question 68

All of a business’ company cars or a fleet of trucks and vans, is an example of?

Answer 68

Fleet insurance

Question 69

A minimum number of vehicles is required before insurers will consider rating vehicles as a fleet.

Answer 69

True | Fleet insurance

Question 70

The majority of insurers require ten or more vehicles to be covered before fleet rating is applied, though some will offer ‘mini-fleet’ policies for over five vehicles if the premium is high.

Answer 70

True | Fleet insurance

Question 71

Generally, the cover (Commercial motor insurance extensions) available is similar to that offered under private motor policies; however, other covers are often included, for example:

Answer 71

``` • contingent third party insurance • joint insured clause or cross liabilities clause • occasional business use • roadside assistance; and • helplines. (Commercial motor insurance extensions) ```

Question 72

• occasional business use

Answer 72

(As per the contingent extension but for comprehensive cover);

Question 73

contingent third party insurance; for example,

Answer 73

Providing indemnity to a policyholder (which is an employer), where an employee is using their own vehicle on the employer’s business and their own insurance (which is intended to indemnify to the employer) proves to be inoperative

Question 74

joint insured clause

Answer 74

(i.e. two or more named insureds are treated as separate policyholders if one has a claim against the other).

Question 75

occasional business use;

Answer 75

This is providing indemnity to an employee of a policyholder employer, where the employee is using their own vehicle on the employer’s business but it is known that their own policy does not cover business use. *This is distinct from the contingent indemnity to the employer described above.

Question 76

roadside assistance; helplines, message handling and administration. are:

Answer 76

Commercial motor insurance extensions

Question 77

On larger fleets the statistical basis becomes more genuinely reflective of account performance.

Answer 77

True | Fleet Insurance

Question 78

These can cover hundreds or thousands of vehicles.

Answer 78

True | Fleet Insurance

Question 79

To reduce administration for the policyholder and insurer by having a single multi-vehicle policy, what reason is this?

Answer 79

One of the purposes for Fleet Insurance.

Question 80

The premium for which can be adjusted at agreed periods, instead of doing so at times of individual changes.

Answer 80

One of the purposes for Fleet Insurance.