Does more discounts give you better cover on your asset?

Does falling policy rates amongst insurance companies as result of excessive competition favourable to you as a consumer? May be because you could get discounts as low as 50 percent, 60 percent and all that, particularly in car insurance?

The answer may mean no, because as you push for too much discounts, you have directly or indirectly asked for exclusions, which may be dangerous for you in the long run. Exclusion in insurance simply means a loss or risk that a policy does not cover.

This is more common today with vehicle comprehensive insurance, where customers push and ask for discounts until it will almost turn to zero premium and if your insurer accepts, beware, you have excluded minor accident repairs, may be some members of your household from driving the car and other special losses like flood and political violence.

An insurance customer who took a comprehensive car cover was shocked when he CRV car had a minor accident and the right full light costing like N80,000.00 got broken and when he took it to the insurance company, he was told he took exclusion for minor repairs that fall within minimum limits. This is what exclusion clause does in insurance, so ask your insurer what are they exclusions and know whether you should pay premium on them.    

Julius Edeth, insurance brokers said this is a dangerous trend for our market and does not favour the insured. “Customers are pushing for too much discount, and it’s not good insurance, he said.

Many auto accident losses routinely surpass minimum limits. That’s because minimum coverage may not provide enough protection in an accident, expert says.

According to insure.com “Excluded’ really means you’re excluded. No, seriously.

However, car insurance typically operates under a principle of “permissive use,” explains John Montevideo, past president of the Consumer Attorneys of California. If you loan your car to someone and he or she has an accident, that driver typically is covered as a “permissive user” under your policy.

If the driver has been explicitly excluded on your policy, however, the concept of permissive use goes out the window, as do the insurer’s traditional responsibilities to defend and indemnify. Damage to your vehicle won’t be covered by the insurer, and both the policyholder and the driver can be held personally liable for any damages caused to others in the crash.

Exclusions typically aren’t arbitrary. They’re meant to make sure that a high-risk driver in your household won’t get behind the wheel.

It’s not always the insurance company that inserts exclusions into your policy. Sometimes policyholders request exclusions to lower their premiums.

Some markets say California has a good-driver discount, which can save you big money.  Drivers who qualify for the good-driver discount get rates at least 20 percent lower than those who do not qualify for the discount. A  California law allows you to exclude drivers in your household who could cause you to lose that discount.

If your policy has exclusions, your insurance company won’t accept any excuses for allowing excluded persons to drive.

Perhaps no one would fault you for allowing your excluded spouse to drive you to the hospital if you were having a heart attack. However, if he or she got into accident on the way, the insurance company would be within its rights to refuse coverage. Excluded means excluded, period. There are no loopholes. The good news is that an exclusion isn’t forever, but you’ll have to contact your insurance company and ask for it to be removed. Keep in mind that the insurer is under no obligation to comply with your request.

Once exclusion is imposed, typically it remains in place until you and your insurance company mutually decides to take it off the policy.

According to the experts again, there are extreme cases where children too young to drive are excluded from policies.  “They’re basically saying, ‘We’re going to exclude even the dog, if we can find his name.’ It’s overkill, really.”

So even if you haven’t asked for a member of your household to be excluded, check with your insurance agent and read your policy carefully. The last thing you want is to find out too late that your child or spouse wasn’t supposed to be driving the car he or she just crashed.

Vehicle insurance (also known as auto insurance, car insurance, or motor insurance) is insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise therefrom. The specific terms of vehicle insurance vary with legal regulations in each region.