Nature of Motor Insurance Policy

A person must have motor insurance before he can drive his vehicle in a public place. Motor insurance protects the insured, his vehicle and other motorists against liability in the event of any accident. It provides financial compensation to cover any injuries caused to people or their property.

Vehicle insurance (also known as auto insurance, car insurance, or motor insurance) is insurance purchased for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accident.

Vehicle insurance can cover some or all of the following items:

• The insured party
• The insured vehicle
• Third parties (car and people)

Different policies specify the circumstances under which each item is covered. For example, a vehicle can be insured against theft, fire damage, or accident damage independently.

An excess payment, also known as a deductible, is the fixed contribution insured must pay each time his car is repaired through the car insurance policy. Normally the payment is made directly to the accident repair "garage" (The term "garage" refers to an establishment where vehicles are serviced and repaired) when you collect the car. If one's car is declared to be a "write off" or "total loss"("write off" is commonly used in motor insurance to describe a vehicle the worth of which is less than the cost of repair), the insurance company will deduct the excess agreed on the policy from the settlement payment it makes to the insured.

If the accident was the other driver's fault, and this is accepted by the third party's insurer, the insured will be able to reclaim the excess payment from the other person's insurance company.

A compulsory excess is the minimum excess payment the insurer will accept on the insurance policy.

In order to reduce the insured’s insurance premium, He may offer to pay a higher excess than the compulsory excess demanded by the insurance company. The voluntary excess is the extra amount over and above the compulsory excess that the insured agree to pay in the event of a claim on the policy. As a bigger excess reduces the financial risk carried by the insurer, the insurer is able to offer you a significantly lower premium.