MOTOR INSURANCE

Car Insurance Glossary

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• Add-Ons – As car insurance policies offer a basic form of coverage for your vehicle, you may want to consider add-on covers/extensions for extra protection and peace of mind. According to PIAM, here are some of the add-ons which can be included in your car insurance policy :

1. Flood, windstorm, rainstorm, typhoon, hurricane, volcanic eruption, earthquake, landslide/landslip, subsidence or sinking of the soil/earth or other convulsion of nature

2. Windscreen protection

3. Strike, riot and civil commotion

4. Tuition and testing purposes

5. Additional named driver

6. All drivers’ extension for private car policies issued to a company of businesses only

7. Passenger liability

8. Liability of passengers for acts of negligence

9. Additional business use

• Accident - An event or occurrence that is unforeseen and unintended.

• Adjuster - One who settles insurance claims; may be a salaried employee or an independent operator.

• Average Clause - In the event of a partial loss, your claim will be adjusted in accordance to the portion that your vehicle is insured for. For instance, if you have insured your car up to 60% of the market value, you will only receive up to 60% of the total repair cost by the insurer.

• Car Liability Insurance - A form of liability insurance that is specifically designed to indemnify for loss incurred through legal liability for bodily injury and damage to property of others caused by accident arising out of ownership or operation of a car.

• Excess – Also known as a deductible, it is the amount that you will need to bear before your insurance company pays for the balance of your vehicle damage claim. Excess can be divided into 2 types which is compulsory excess and other excess.

• Compulsory Excess – This is non-negotiable and is usually set by the insurer in the situation that your vehicle is driven by : - a person who is not named in your policy - a person who is named in your policy but under the age of 21 - a provisional (P) driving license holder - a full driving license holder with less than two years driving experience

• Other Excess – This is negotiable and applicable at discretion of the insurer. Insurers are sometimes willing to implement no excess on a case to case basis.

• Consequential Loss – Damages which are caused by a certain action committed by the policyholder or a third party and not an outcome that is unexpected.

• Claims Adjuster – an individual who investigates insurance claims to determine the extent of the insurer’s liability.

• Release Letter/Release of Liability – This refers to the legal document between 2 parties. Typically, it involves the Releasor (person promising not to sue) and the Releasee (person or company who may or may not be liable). By signing this form, the Releasor acknowledges that he or she understands the risks and claims involved and agrees to not sue the Releasee for past or future injuries or damages.

• Daily Cash Allowance – an amount of money that is paid daily to the policyholder in the situation that the vehicle insured is undergoing repairs

• Loading - This refers to the extra charge that is added by insurers when they consider the potential policyholder as a risk-prone individual. For example, if you are a new driver, your car insurance policy may be higher as insurers will deem that you are more likely to end up in an accident due to your lack of driving experience.

• Other factors which may lead you to a car insurance with a high loading would be the age of your vehicle. So yes, even it may seem like a good idea to buy an imported 8-year-old second-hand luxury car with a low mileage at a fraction of it’s price, some insurers may consider it as a risk when they bring you onboard as a policyholder of their car insurance as the perception that an older car is more likely to encounter problems due to daily wear and tear remains.

• Compensation for Assessed Repair Time (CART) – A form of third party benefit, it is compensation provided by the insurance of the person who have hit your vehicle and the amount is decided by the number of days it takes for your vehicle’s repair.

• A claims adjuster will perform the assessment and specify the amount of repair time required for the car repair. The purpose of CART is to provide you with funds which can be utilised for a rental car, allowing you to continue with your daily life as the workshop repairs your car within the specified duration.

• Bear in mind that CART does not equate to the amount of time your car will be spending at the workshop and that it is only available for accident victims.

• Loss of Use - In the event that you are involved in an accident, you may be provided a vehicle or a sum of money which you can use to rent a vehicle.

• Market Value – The sum of the insured amount based on the current market value of the vehicle

• Agreed Value – The sum of the insured amount based on the vehicle’s age and model

• Insured Value/Sum Insured – For new vehicles, the insured value refers to the purchase price. For other vehicles that do not fall under this category, the insured value is equivalent to the market value of the vehicle when a policy is bought.

• Betterment – When your damaged vehicle is sent for repair, it is normal that some wrecked parts are replaced with new franchise parts. Your insurer will only bear a portion of the costs. You will have to pay the difference according to the standard scale of betterment which can range from 0% to 40%.

• Roadside Assistance – A service provided by insurers to policyholders who may be suffering from a vehicle breakdown/accident

• No Claim Bonus/Discount – Available in the form of a refund in premiums, either in full or partial. It can also be a discount on your premiums if you decide to renew your car insurance policy as a loyalty benefit

• Disclosure – Letting the insurers know of information that may be vital in influencing the premium of the car insurance.

• Actual Value Cost – Amount required to repair or replace your vehicle plus depreciation.

• Replacement Cost – Actual amount required to repair or replace your vehicle minus depreciation.

• Theft - The unlawful taking of property of another: the term includes such crimes as burglary, larceny, and robbery.

• Under-Insurance - A condition in which not enough insurance is purchased to cover the total cash or market value of the insured asset.

• NCD (No-Claim-Discount) - The premium payable may be reduced if you have no-claim-discount (NCD) entitlement. NCD is a ‘reward’ scheme for you if no claim was made on your insurance policy on an annual basis. Different NCD rates are applicable for different classes of vehicles. For a private car, the scale of NCD ranges from 25% to 55% as provided in the policy.