Insurance can get as technical as you would like it to be. From various types of insurance, several levels of coverage to innumerable jargons in the policies, it can just go on and on and on. Most of the time you will not even have to go through your insurance policy schedule if you have placed your insurance with a well known and trusted company.
Motor insurance, however, is one thing you should be well aware of. It is not only mandatory to take out insurance for your car in many countries, at least that I have come across, but also seems ethical to at least take out third party liability insurance where it is not.
It is certainly essential to understand the jargon and key terms in your policy in order to be able to understand what it means and buy what is right for you. Despite placing your trust in the insurance companies, you must review what you purchase and raise questions if anything at all is unclear. It is imperative that you are a well informed customer regardless of what you purchase.
Speaking of motor insurance, your policy may entail several terms that occasionally do not even sound like English! I don’t plan to bombard you with all these terms in one shot and so I have planned to bring these out slowly and gradually to you in a way of what I call, ‘Motor Insurance Terms Explained Series’. In this series, I explain, as below, some of the basic terms that you will come across in your motor insurance policy:
1. Third party liabilities:
a. Third party property liability: This will provide you with the cover to compensate for any accidental damage to the third-party property for which you are responsible for. The insurance company will pay the amount of the claim up to the limit specified in your policy schedule.
b. Blood money: Similarly, the insurance company will compensate for the death or bodily injury of a third party person arising due to an accident caused by the driver/insured. In an unfortunate scenario where the accident results in a death, the form of compensation paid to the family of the third party is known as blood money.
This is what you pay for your insurance. Just a technical term used for the price of the purchased product. The premium is calculated by the insurance company whilst taking into consideration various factors that may affect the frequency and severity of the insured event taking place. These factors vary from country to country but are normally the driver’s age, driver profile, loss history, car model, etc.
This is an amount of money that the insured has to pay in the event of a claim resulting from an accident at your fault or in a hit and run case. For example, if your policy mentions an excess of 500 AED, then you would have to pay this amount at each claim incident. The amount of claim over and above the excess will be paid by the insurance company.
If at the time of the accident, the driver is found to be less than 25 years of age of with less than 12 months of UAE license, other than a convertible license, then the insured/driver is legally responsible for paying 10% of the claim in addition to the amount of excess specified in the policy.
For now that is it but there is a lot more to come so keep an eye this space!
[Image Source: internetautoguide.com]