Your Car Insurance Policy Limits may Be Lower Than You Expect.

There are strict policy limits placed on car insurance products.

Most insurance policies also have maximum limits the insurer will pay out in a claim and will usually depreciate your car to its pre total loss value. Here are some examples taken directly from the Key Facts of several UK insurance companies...

1. The most We will pay is the Market Value of Your Car, Accessories and spare parts when lost or damaged and this will not be more than the amount for which you insured them. We will retain the right to the salvage of a vehicle following a total loss.
2. If you have bought your car under a finance or hire purchase agreement, or are leasing it, any money owed to the company or bank involved will be paid directly to that company or bank first and any balance of the agreed settlement sum will then be paid to you. (Note *This is an important statement as it lets you know that the insurer will not pay the full amount, but the agreed settlement sum! Normally this will mean the book value. Not good news really.)
3. We (The Insurer that is) will not pay more than the lesser of the Market Value of the Car at the time of the loss and the amount your car is insured for less any Excesses. If you bought your car at a lower price than would normally be found in UK trade guides, We (The Insurer that is) will reduce the Market value accordingly. (Note *Another important factor to think about.)
4. Cover for the loss of or damage to any radio, cassette, disc player or similar apparatus generally only applies to equipment permanently fitted to your car and in certain cases only applies with fully comprehensive insurance. The maximum payout should be agreed before you actually buy your insurance and often there is a sliding scale for the remuneration dependent on the level of cover you buy.
5. Higher excesses apply to younger or in experienced drivers so be aware of this.
6. Damage to property by Your Car is limited to a pre set amount which varies between insurers and will almost certainly include all costs, expenses and indirect losses.
7. There is a pre determined maximum amount the insurer will pay towards loss or damage to personal belongings carried in or on your car caused by fire, theft or accidental means, so know what this limit is as it is normally very low.

Please refer to your policy document for a full list of exclusions as this is an exert taken directly from a UK insurers Terms and Conditions.

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