I am not sure about you, but motor insurance is a thought that I still find a bit confusing. Sure, I shell out my monthly premiums, hope for the best and stress when I have to put in a claim, but apart from that I basically file everything associated with insurance policies to the back of my mind and just hope for the best.

I do think insurance cover, irrespective of whether it’s motor insurance, property insurance, medical insurance, or term life insurance ought to be issued with a detailed guide of all the stipulations and phrases associated with the specific form of insurance. In that way even the normal person on the street (which includes me and you!) will have a better perception of what our insurance policies entail and what we are in actual fact paying for.

Let’s take a look at a handful of often used phrases in the motor insurance industry:

Named driver versus regular driver. When you acquire a motor insurance policy, you (the policy holder) will most likely be the regular driver of the vehicle. This means that most of the times the vehicle is on the streets, you will be the one behind the steering wheel. It is however also doable to add a named driver to your policy. Say by way of example your spouse, child or other person will occasionally drive your car, this must be brought to the insurance corporation’s attention and this person should be included on your policy as a named driver. If your vehicle is involved in an accident, and neither a named nor the regular driver was driving, your insurance firm could possibly decline your claim. Remember that an insurance company will review your entire risk profile before determining your monthly premiums, so if your named driver(s) does not have a good insurance history, this will have a negative impact on your insurance profile and subsequently your premiums.

New for old insurance. In insurance terms and conditions, this means that if an item is lost or destroyed it will be replaced with a completely new item. Normally, this is more relevant to home insurance where you might have to replace a stolen Television. However, motor insurance works slightly differently. The value of your car decreases basically when you drive your vehicle off the display room floor. Therefore if your vehicle is stolen when it’s about a year old, the insurance provider will generally calculate what the current market value of your motor vehicle is, and only compensate you for that amount. If you would like insure your car at replacement value you will end up with an almost unaffordable monthly premium as the risk to the insurance firm is simply too high!

Agreed value. As mentioned in the preceding paragraph, a vehicle is usually covered by insurance at market value. It is however also possible to insure your vehicle at retail value or trade value. Make sure that you discuss your options with an insurance professional or broker to determine which type of policy would suit your vehicle and requirements best.

I really hope the above terms and conditions have managed to shed some light on an otherwise unknown issue.

For more information on motor insurance, go to http://www.afi.co.za