Whatever insurance you buy, ensure that you obtain all information prior to committing your premium and that you know what types of loss are covered – and what is not!
What is an Excess?
This is the amount of each claim that you pay yourself.
There are no hard and fast rules as to the minimum or maximum amount of excess which an insurance company may apply. There might be different excesses for third party liability or own damage claims. If the driver is below the age of 25, the excess is normally higher
You may also choose to increase the excess in return for a discount on your premium. However, in the event of a claim, you would be required to pay such higher excess.
Will my motor insurance policy still cover me if an accident happens when someone else is driving my car?
When you purchase motor insurance you may choose to restrict driving to yourself and certain specified people such as your husband/wife or people beyond a certain age. In return you will get a discount. These are normally referred to as “Authorised Drivers”.
If you choose to allow other drivers under the age of 25 to drive your car, your premium will increase substantially. When buying insurance make sure you restrict the cover to the people you need to allow to drive your car. Remember their accident record and age may also influence your premium.
Do not allow anyone to drive your car unless they are covered by your insurance policy.
Some policies may automatically extend cover if your car is being serviced or repaired by a motor repairer.
What should I do if I am involved in an accident?
Knowing what to do if you are involved in an accident can save lives and also make the claims process easier. Stop your car.
- In the case of a front to rear collision proceed to complete the “Bumper to Bumper Form”. DO NOT LEAVE WITHOUT FILLING THE FORM. Do not block traffic, as it may be unsafe and you also risk being fined. You should move the vehicles to a safer location in order to complete the form. If there are two vehicles involved in the accident you only need to complete one form. If there are more vehicles you will need more forms. Make sure you fill in the correct details, and describe the accident as accurately as possible. Do not forget to do a rough sketch of the accident there and then. Sign your section of the form. Then ensure that the other party fills in his part correctly and signs it. Check his vehicle registration plate number and any possible details. All parts must be completed in ink to ensure that no information is easily changed after you leave each other. The form is in duplicate. So you should each take a copy and give it to your insurer or insurance intermediary. Keep a photocopy for your own records.
- If you are involved in any other type of collision or in a front to rear collision of a very severe nature call the Local Wardens Central Office on 21320202. This telephone line is solely dedicated to collision reports.
- Once you call the Wardens’ Office, you will be asked a series of questions namely whether there are injuries involved or whether there has been damage to government property. In accordance with the replies which you will provide, the Wardens’ Office will provide to summon the police or to call an ambulance as the case may be. They will also call the tow truck if you need.
- In the case where you have called the Warden’s Office, you must wait till they arrive on the scene of the accident. DO NOT MOVE THE VEHICLES UNLESS INSTRUCTED TO DO SO.
- Take reasonable steps to protect your car from further damage, such as putting on hazard lights.
- The Warden will report on the accident, draw a sketch, take photographs and obtain statements from the drivers involved and from any witnesses.
- When giving your statement, do not admit liability for the accident because this may severely prejudice your situation. The insurance companies will decide about that.
- If you do not have a camera with you, use the camera in your mobile phone to take photographs of the accident. Take photos from different angles. Give a copy of the photos to your claims handler.
Remember to keep a copy of the “Bumper to Bumper” form in your car. These forms are available from Local Councils and from insurance companies.
How do I file a claim?
Follow these steps:
- Call your insurance representative as soon as possible after the accident, regardless of who is at fault and the size of the loss. You may eventually decide not to make a claim under your insurance policy, but still notify them immediately.
- In the case of a front to rear collision submit the copy of the front to rear collision form to your insurer. Give copies of any photos you may have taken following the accident.
- In any other accident, you will be required to complete a claim form. Fill in the details as accurately as possible and ask your insurer or insurance intermediary for any assistance you may need to complete the form. Sign it and keep a copy. Give copies of any photos you may have taken at the accident scene. Give any additional information you collected at the accident scene that was not requested on the claim form. Ask your insurer or insurance intermediary how to proceed and what other forms or documents will be needed to support your claim. Keep a copy of everything you provide/give to your insurer or insurance intermediary.
- Ask your insurer or insurance intermediary:
- Does my policy contain a time limit for filing claims and submitting bills?
- Is there a time limit for resolving claims disputes?
- If I need to submit additional information, is there a time limit?
- When can I expect the insurance company to contact me?
- Do I need to get repair estimates for the damage to my car?
- Will my policy pay for a rental car while my car is being repaired? If so, how much?
Remember that once you make a claim, you will be required to pay the agreed excess to the insurance company.
Each company may have its own procedures governing the claims process. If you have any questions, call your insurer or insurance intermediary.
All insurance companies in Malta adhere to a Handbook of Best Practice for Third Party Motor Liability Claims issued by the Malta Insurance Association. This handbook applies when an insurer deals with a third party who claims damages against its customer (claimant). It does not specifically regulate an insurer who deals with a claim by its own customer for own damage (under a Third Party Fire & Theft policy, or a Comprehensive policy).
Who will obtain the wardens or the police report?
The wardens’ report will be automatically sent to the insurance companies of the parties involved in the motor accident. Although the report is property of the insurance company, it may give you a copy of the report on request. Charging you for the report is at the discretion of the insurance company.
The police report is normally sourced directly from the police authorities. If you have comprehensive cover, the cost of the report is refunded to you if you obtain it yourself.
What happens if an insured fails to make a claim with the insurance company?
In the case of a traffic accident, the insured must inform the insurance company as soon as possible and in any case by not later than two weeks by notice in writing of the occurrence of the event together with such particulars of the event of which he/she may be aware.
Where the insurer has reasonable grounds to believe that an event has occurred in relation to motor vehicle as a consequence of which the insurer may have to pay a claim to an injured party but the insured fails or delays to lodge a claim, the insurer is bound by law to treat that event as if a claim had been made.
In the event that a third party fails to inform his insurer of the event which may result in a claim, there is a process which needs to be followed. This process is described below:
a) eTARS (Electronic Traffic Accident Report Services) Reports (i.e. the wardens’ report) are normally sent to insurance companies after 3 or 4 working days from the day of the accident.
b) The insurer of the party who is likely to be at fault will treat any notification received as a claim. The insurer would not normally accept liability before it can discuss the circumstances of the accident with its insured. That is the reason why the insurer would send a surveyor to inspect the victim’s vehicle on a “without prejudice basis”. The insurer would also normally discuss the case with the innocent party. One has to appreciate that it is a basic principle of natural justice that both sides should, at least, be given an opportunity to be heard within a reasonable time.
c) There are instances where the party who allegedly is at fault queries the accuracy of the eTARS Report and refuses to accept liability. At that point, his/her insurer can do either of two things (i) if fault is not totally clear, propose to his policyholder the option of going to voluntary arbitration so that an independent arbiter can determine fault, or (ii) if the insurer is convinced that fault lays with his policyholder, formally inform him/her that he/she should accept liability or else be prepared to bear the cost of any legal action taken against him/her.
d) Whichever way the recommendation is given, the third party cannot refuse to lodge a claim. If the errant third party refuses to take the insurer’s suggestion to accept liability, there is yet another process to go through. This requires the insurer to write formally to the policyholder informing him/her of the intention to pay compensation to the third party unless the policyholder, in writing, gives specific instructions to the insurer not to proceed with payment. Presumed innocent third parties may complain about this fact - however, whilst every insured is bound to lodge a claim, they have a legal right not to accept liability. An insurer cannot legally accept liability against the policyholder’s express wish.
e) Some insurers recommend to the presumed innocent party to send a legal letter so that there would be a formal claim registered against their policyholder. Although there is nothing which should preclude the third party from doing so (especially if he wants to expedite matters), this may be an additional (and in some cases unrecoverable) expense. A legal letter may not be required if the insurer intends to process the claim. It is only necessary if the policyholder has disagreed (in writing) with his insurer’s opinion that he is to blame. If the third party wants to start legal proceedings he has a choice as to whether to proceed directly against the insurer or the responsible party
f) A legal letter or some similar form of written communication is the minimum necessary to prove to the third party’s insurer that there is a claim by the third party.
g) The law is quite clear on this aspect. Article 15 of Chapter 104 of the Laws of Malta provides that a registered or judicial letter be sent by the third party insurer to their client granting him notice of the claim and the intention to accept liability. Only after the requisite 10-day period has lapsed can the insurer proceed to pay the innocent third party. It is to be noted that the law (and the handbook of Best Practice for Third Party Motor Liability Claims issues by the Malta Insurance Association) requires that the insured be given an indication of the amount to be paid - which would, strictly speaking require the third party to submit bills regarding repairs or an approximate indication of the total amount due as resulting from the survey report.
h) As soon as the insured is notified with the insurer’s registered or judicial letter sent in terms of law, the 10 days required according to law would start running, and should the insured fail to lodge an objection within that time-frame, the insurer shall be entitled, according to law, to pay the innocent third party.
i) If a vehicle has been declared beyond economic repair, this means that it is not financially feasible for the insurer to repair it as in doing so might very well exceed the vehicle’s market value.
The process mentioned above can take from a few days to several weeks, depending on the circumstances of the case.
Whilst one naturally sympathises with third parties who are involved in accidents and suffer unnecessarily, one must also appreciate that the law must be respected.
Finally, there is also another important aspect which should be borne in mind. The innocent third party might argue that his vehicle is not in a good state to be road worthy as a result of the accident (until it is repaired). Thus he/she is deprived ofits use during the time until a decision is taken by the insurer to accept liability and authorise repairs. One must remember that it may be possible for temporary repairs to be undertaken so that the vehicle may be driven without the risk of contravening any traffic regulations. Such situations may however complicate themselves if the financial outlay for repair works is high. This too might appear as an additional financial burden for the innocent third party, but repair works would nevertheless have to be carried out sometime or other, whether reimbursable or not (especially if the case is referred to arbitration and the presumption of innocence is not upheld).
What happens if I am involved in a car collision with a Government-owned vehicle?
If you are involved in a collision involving vehicles of the Armed Forces of Malta, the police and Maltese Government-owned get in touch contact the police rather than the wardens. If you contact the latter, they will contact the police themselves once they arrive on the spot.
Claims involving vehicles of the Armed Forces of Malta, the police and Maltese Government-owned are handled by the Protection and Compensation Fund (address: c/o Malta Financial Services Authority, Notabile Road, Attard BKR 3000) and the Motor Insurers’ Bureau (Malta Insurance Association
43A/4 St. Paul's Buildings, West Street Valletta, VLT 1532) 1532 Tel: (+356) 21232640; email: [email protected]).
The handling of such claims is governed by LN 189 of 2008 [Motor vehicles Insurance (Third Party Risks) (Insurance Exempt vehicles) Regulations, 2008] and an agreement between the Fund and the Government.
If you are insured on Third Party or Third Party Fire and Theft basis, it might be best if you seek the assistance of a lawyer to assist you with formulating your claim. If you are fully insured, your policy may also cover you for any limited legal assistance. It is in your best interest to verify this with your insurer as legal assistance may be at the discretion of the insurer.
The claims process involving a vehicle of the Armed Forces of Malta, the police and Maltese Government-owned may take some time to conclude.
What should I do if I am having trouble settling my claim?
- Inform your insurer or insurance intermediary of the situation.
If the person handling your claim is unable to solve your problem, contact the head of the insurer’s claims department. Inform him that you have a complaint and ask for the procedure you need to follow to lodge your complaint.
- Be prepared to support your case.
Send any documents and a letter explaining why you are not satisfied. Make sure you have the facts and figures to back up your argument. Be certain to include your address, claim number, day and evening phone numbers, and any other important identifying information.
- Contact the Office of the Arbiter for Financial Services
You may contact the Office of the Arbiter for Financial Services on 80072366 or 21249245. Further details about the set-up, including information about the Arbiter’s complaint procedure are accessible from the portal – www.financialarbiter.org.mt
- Consult a lawyer
If you do feel the need for legal assistance, consult a lawyer who specialises in motor insurance. You can follow the progress of your claim by asking your lawyer to provide you with copies of all correspondence. Your lawyer must have your agreement before committing to any settlement.
After your claim has been settled, take time to re-evaluate your motor insurance coverage to make sure you have adequate protection to cover you against any future damage or liability claims arising from the use of your car
What types of car repair parts can be used to repair my car?
It is important to keep in mind that the purpose of the motor insurance policy is one of indemnity namely that the insurer must put you back in the financial situation you enjoyed prior to the loss – no better, no worse. The insurer does not simply check the sum insured and pays you an amount subject to the limit of the sum insured. Your loss must be evaluated and made good. Therefore it is important that the age of your vehicle and its condition are carefully assessed. As previously mentioned, for the purposes of compensation, the value of the vehicle is the market value at the time of the accident.
When it comes to replacing parts, insurers will normally use Original Equipment Manufacturer (OEM) parts if the car is new or is in a generally good condition. An insurer may recommend non-OEM or second hand replacement parts where, in the opinion of its surveyor, using new OEM parts may result in an enhancement in the condition of the vehicle and which potentially could put you in a better financial situation than that which existed before the loss.
Some insurers may recommend non-OEM or second hand replacement parts for vehicles which are five or six years old. This may be unfair if applied without taking into account the conditions of the vehicle (including upkeep, maintenance and mileage, for example). Insurers and their appointed surveyors are expected to assess each vehicle objectively, rather than rigidly. Moreover, insurers and surveyors are well aware that repairs are to be carried out in accordance with strict safety and quality standards. If you doubt the quality of the repair works (including parts), you should ask the insurer and surveyor to confirm (in writing) that such works conform to such standards.
If imitation parts, non-OEM parts or recycled second-hand parts are used on your vehicle, you should seek assistance from your trusted repairer as these may vary in quality and standard. You should also clearly discuss the parts’ origin and brand with the surveyor and insurer before commencing the repairs. You have the right to refuse spare parts of dubious or inferior quality especially if their installation might put you at any risk.
The fact that non OEM parts are recommended is not in itself a reason to refuse such parts from being used. If you have identified parts which are of better quality than those of the same category (e.g. second hand parts) sourced by the insurer but which may roughly cost the same, you should inform the insurer and make arrangements for such parts to be used instead.
You also have the option to reach an arrangement with the insurer so that original parts are used and you pay for the difference in cost (i.e. the betterment will be at your expense).
Do I get a replacement car while my car is being repaired following an accident?
This cover is called “Loss of Use” or “Car Hire Extension” in most motor insurance policies. You may purchase this cover as an extension to a comprehensive policy. Some insurance companies offer a car replacement at no extra charge for comprehensive policyholders. So, make sure you read your policy carefully.
If you claim for a replacement vehicle under your policy, it is most likely that you will be allowed to hire a car for the period of time your car is actually being repaired. This period of time does not, therefore, include the time waiting for repairs to start. Therefore loss of use due to unavailability of spare parts or service will not be considered.
There will normally be a limit on the car hire fee per day; so make sure you know what this is before you hire a car. You will have to pay any extra amounts yourself (such as deposit on fuel). The insurance policy will also contain a maximum limit of compensation; this is the total amount which the insurance company will pay for the total period of car hire per claim. This cover is available to you whether you are to blame or not for the accident. In the case when you are not to blame for the accident, the car hire expenses will be paid by the other party’s insurance company.
Keep in mind that if you drive a small car, do not expect to rent a 4-wheel drive as replacement vehicle (even if this is for a short time).
If you are insured on third party basis or third party fire and theft basis and been involved in an accident for which you are not to blame then the insurers of the third party would be required to pay you the cost of hiring a car.
Generally, if you are not to blame, you are entitled to request the insurance company of the third party to provide you or refund you with a replacement vehicle not only for the period your vehicle is being repaired but also for the period you may have to wait for the parts to be sourced by the company.
The Maltese Courts have determined that a party who is not to blame for an accident should financially be reinstated in full and has a right to recover the losses and to restore his property to its pristine original state from the guilty party. This also includes reasonable expenses for hiring a rented vehicle car for the period the innocent party’s car is out of action.
However, the Courts have also emphasised that the rights of the person who is not to blame are not limitless and should make every attempt to minimise losses. For example, it would be unreasonable to claim additional rental days if the appointed repairer takes ages to commence repairs for no valid reason. It is therefore important that when claiming reimbursement, one has to prove that it was necessary to hire the replacement car and that the cost was kept to a minimum.
The insurance company should be kept informed at all times in writing of any issues arising from a claim (such as loss of use) and as to any efforts to source parts from any supplier. Therefore you need to inform insurers straight away if you are aware that there is problem in the supply of parts. The person who is entitled to rent a vehicle should request the insurer (in writing) to confirm the maximum amount reimbursable for renting a vehicle per day, against receipt.
Reimbursement for loss of use is not an automatic right but depends on various factors including whether liability is confirmed, and when. An injured party can always claim reimbursement for loss of use by instituting proceedings against the party who caused the accident. In these cases, legal advice should always be sought.
Insurers would not compensate for a hired vehicle when a vehicle is declared beyond economic repair. For new cars (less than 12 months old) most insurers would use a threshold of 60% to declare the vehicle as “beyond economic repair”. This means that if the repair and loss of use costs exceed 60% of the car’s market value then it is not worth repairing it. The older the car is the higher the threshold will be, and this will depend on a number of factors such as the make, age and condition of the vehicle, the type and extent of damage, the availability of parts and the likelihood of complications arising during repairs.
People between the age of 50 and 65 years are less likely to drive aggressively or too fast. That’s the reason why certain insurance companies may offer discounts to drivers in this age bracket.
Increasingly crowded roads and traffic congestion cause many drivers to lose control and become extremely aggressive.
If you encounter aggressive drivers:
- do not challenge them.
- stay as far away as possible.
- you may want to take down their licence plate number and report their behaviour to the police so they will not hurt themselves or someone else.
Drink driving convictions are taken very seriously by insurers. Most motor insurance policies will not cover damage or liability caused in an accident where the driver was under the influence of alcohol, drugs or any other illegal substance. As a result, damage to one’s vehicle will not be recoverable and an insurer will be able to recover from the insured any amounts paid as compensation for damage or injuries caused to third parties in such circumstances. Besides this, convicted drivers returning to the roads may face difficulty in obtaining an insurance cover or else may be required by the insurance company to pay higher premium
Questions to Ask Your Insurance representative about Motor insurance
To give you some more help, here are some basic questions you should ask your insurance intermediary before you buy your motor insurance. Please note, the questions provided are very general; so we advise that you also ask your insurance representative questions that are specific to your policy.
- What type of insurance policy do I need?
- The market value of my vehicle is not on the Guidebook. How should I establish the value for my vehicle?
- If I am involved in an accident tomorrow, what kind of cover can I expect from my motor insurance policy?
- What discounts/additional costs apply in my case? How can I reduce my premium?
- What optional cover is available?
- I drive an old car. Do I need comprehensive cover?
- Who is covered in my car policy?
- What is my excess? Do you recommend my increasing it?
- Can I reduce my premium by choosing a larger excess?
- Would I be able to hire a car while my car is being repaired following an accident?
- I have changed my insurer. Does this mean I will lose my No Claims Discount?
- How can I protect my No Claims Discount?
- What service should I expect if I am insured on a Third Party Only or Third Party Fire and Theft basis?
- I use my car only for a Sunday drive. Does this affect my motor insurance?
- I am buying a new car. Will the type of car I choose affect my insurance rates?
- Does it make a difference as to what insurance I should get if I buy a new car or a second hand one?
- What insurance companies did you contact on my behalf?
DO NOT TRY TO REDUCE YOUR PREMIUM BY GIVING INCORRECT OR INACCURATE INFORMATION TO YOUR INSURANCE COMPANY OR INSURANCE BROKER BY CONCEALING PREVIOUS ACCIDENTS.
IF YOU DO SO, YOUR INSURER MAY REFUSE TO PAY FOR YOUR CLAIM
Here are some useful tips to help you get started
1. Can you afford it?
Work out your budget. It's usually a good idea to take note of your money situation and work out your budget. This can help you decide how much you can put towards buying a car and whether it will be new or second hand. There are advantages and disadvantages to getting a new or used car. Generally, new cars drop in value practically from the minute you drive off, but may possibly hold their value over the longer term, depending on the make and model. A second-hand car is cheaper to buy, but make sure you check out its condition and find out as much as possible about its history. Your decision will depend on your budget and this will also give you an idea of how you'll manage with the on-going costs.
2. How to pay
There are lots of ways you can cover the cost of buying, some more expensive than others. You might have saved up enough money during the years for you to afford paying in cash for the purchase of your car. You may be in position to negotiate a better deal if you pay in cash. If you borrow from a bank make sure you understand how much it will cost you over the life of the loan by checking the APR (Annual Percentage Rate), and think about how the value of the car may change by the time you finish paying for it. Be sure to shop around to get the right deal for your loan. You can decide to pay the dealer in instalments. Many dealers have different finance arrangements; find out how the different options work and which one may be right for you.
3. Other running costs
It's not just the cost of the car you have to think about. You will also need to keep your car going, so remember to consider other regular costs such as fuel and service maintenance. Most of all, don't forget the annual licence payment and motor insurance to keep your car on the road.
You have to take out motor insurance before you can drive your car in a public place. There are different levels of cover to choose from. Motor insurance protects you, your vehicle and other motorists against liability in the event of any accident. It is illegal not to have any form of motor insurance.
When looking for car insurance, don't always settle for the cheapest insurance. It is important to understand the different types of policies available, and their limitations. Some policies will insure for more eventualities than others, and you need to make sure that you choose the correct policy without paying too much. Your car insurance policy should be based on your experience, driving style, age and affordability.
The cost of your insurance policy
People often grumble about rising car insurance costs. Why do prices go up? Clearly, there are many factors that influence the quote you will be given. Some are personal to you and others depend on the level of benefits you want from your motor insurance policy.
Below you can find those components which will greatly influence the premium you will pay for your motor insurance cover:
- the level of insurance cover;
- the type of vehicle;
- the age of the driver/s;
- your “No Claims Discount” (NCD);
- your past accident record;
- the nature of use of the car.
Below you can find a number of ways in which you can reduce your premium, some of these will not cost you a thing, while others will mean a little bit of investment in your vehicle:
- you limit the authorised drivers;
- you choose to increase the excess;
- you insure more than one vehicle with the same insurer;
- you have an approved car alarm installed in your vehicle;
- you also have a household insurance with the same insurer;
- shopping around to find the best deal.
Reducing your premium should never be at the cost of reducing the cover offered. Buying the cheapest car insurance can be the most expensive mistake you could make, especially if you are not covered when you come to make a claim. Making sure that your car insurance covers you correctly and meets your needs is more important than saving a few euros. It is important to note that insurance providers who offer cheap policies have generally stripped out certain segments of cover.
Contractors’ all risks insurance
What is a Contractors' All Risks Policy?
Contractors' All Risks Insurance is a policy designed to cover you during any construction projects which you might undertake. Such works may include alteration works involving civil engineering to your existing residence or business such as inclusion of new rooms, additional floors or lifts and construction of new buildings. Cover is for damage to the contract works and damage or injury for which you might become liable for against third parties.
The Contractors’ All Risks policy is a project based policy issued only for the duration of the contract works. There may also be instances were Contractors issue an Annual Contractors All Risks Policy covering various contract usually capped at a limit for any one single Contract.
Is there a legal requirement to issue a Contractors All Risk policy when undertaking a construction project?
The law (Legal Notice 72 of 2013 of the Laws of Malta) requires developers to ensure that demolition, excavation and construction works which fall under the provisions of the regulations are appropriately and adequately insured to cover any single occurrence or recurrence of damages sustained by third party property, disability to persons or death as a result of the construction works or activity being undertaken by the developer and the contractors working on the site. The insurer is required to carry out an appropriate and adequate assessment of the risks involved in each particular case and provide insurance cover amounting to not less than €500,000.
The law defines “developer” as
- the person on whose behalf the development application in terms of law has been submitted for the works on site or,
- for construction activities which do not require a development permit, any person, entity or company on whose behalf the construction activity is undertaken.
Therefore, if you are undertaking any type of construction work, whether under a development permit or otherwise, it is advisable that you double-check with your architect and construction company whether you need to have a separate policy of insurance to cover the risk of damages to third party property or injury to persons that may result through the proposed works.
In any case, your construction company should have its own insurance cover.
What does a Contractors' All Risks Policy cover?
Cover under the policy is split in two parts:
- Cover in respect of any damages to the contract works including materials such as tiles, stones and fittings both whilst stored on site and after being installed/used on the construction. Cover is on an All Risk basis, subject to the exclusions under the policy. The policy may include cover for property which is owned by the insured on the contract site and which will not be part of the works such as during alteration works. This is called ‘own surrounding property’ extension and a separate sum insured needs to be provided, usually by an architect, for such cover to apply.In addition to the above, this section may also cover costs for removing debris should there be an accident on site, architects and Planning Authoirty fees and cover for tools and equipment belonging to the contractor if the latter is included under the policy cover as joined insured.However, it is important to note that expenses for rectifying deficiencies that would have been incurred anyway – without the occurrence of such loss or damage such as architect fees to alter the plans due to Planning Authority orders or removal of debris after demolition due to inadequate works – are not indemnified/covered.
- Cover in respect of any legal liability at law towards third party bodily injury and/or death and/ or property damage up to a limit as specified in the policy. This would cover any additional legal fees subject to the approval of your insurance company. The policy may also be extended to cover vibration, removal or weakening of support; however such section might attract additional premium, a separate higher excess and usually a separate limit.It is important to note that both in respect of Own and Third party property damage it is not the intention of the policy to cover small cracks, settlement cracks and other small damages which normally occur on existing and neighbouring properties during and after the contract works are ready. This is also reflected in the usually high excess which is imposed under the policy.Also, the insured cannot choose to cover only the most hazardous aspects of the projects such as excavation. The whole project, from demolition to excavation and construction stages, need to be included. If required, the finishing (plastering, electrical installations, tiling etc…) works may also be covered under the policy; however such cover is optional and usually incurs an additional premium. This of course is not applicable when the policy is taken out for alteration works only.
What values would be insured under the policy?
The sum insured must be equal to the amount stated in the building contract, plus the value of any construction material supplied and/or additional work performed by the principal. The sum insured for these needs to be provided by you (with assistance from your architect) and can be calculated by checking the total cost of the works either up to shell form or including all the finishing works (depending on the agreement reached with the insurer).
Any increase in the contract sum must be notified immediately to the insurers in order to avoid underinsurance. If it is found out at the end of the construction period that the sum insured has increased, an additional premium may be charged at the discretion of the insurer.
In respect of Third Party property damage and bodily injury, a limit would usually be provided by the insurer. It is of utmost importance to always ask you insurer the value of this limit as well as if it applies in respect of each claim or for the duration of the policy.
Who would be covered under the policy?
You, as principal who commissioned the works, would be the main insured under the policy. There is also the option to include the contractor and any sub-contractors under the policy. This may be needed due to the ultimate liability (the person/party ultimately responsible for any damage) in the event of accident falling with the principal who is responsible for the site and it is therefore ideal to cover all the parties involved in the works.
It is always important to ask the contractors and sub-contractors if they already have an insurance covering themselves in force. In order to prevent overlaps or gaps in the cover provided, CAR insurance should ideally be concluded for all parties concerned after discussing the matter together and possibly prior to signing the works contract.
When do I need to take up the policy and for how long?
It is important that you always issue the policy prior to the commencement of the works. Insurers usually refuse to issue a policy after the works have started as it would be difficult to conclude if damage was caused prior or after the inception of the policy thus causing problems at claims stage.
Unlike other insurance policies which are issued for a period of 12 months and renewed yearly, a Contractors’ All Risks Policy is only issued for the duration of the project only which can vary from as little as days or a few weeks to years for more complex projects.
What if there is a delay and works are not finished at expiry date of the policy?
If there is any delay in the works, the policy can usually be extended, at the discretion of the insurer and subject to full information to be provided by you. Additional charges may apply to extend the policy depending on the nature of the remaining works and duration for which the extension is required.
Can I choose to cover only third parties without covering the contract works?
No, it is not possible to cover only your liability towards third parties since both covers (own and third party damage/injury) are offered together under one policy and selection is not available.
What information would I need to obtain a quotation for this policy?
Given the sensitive nature of the cover the insurer would usually require more information than provided for on the proposal form mainly:
A Method Statement compiled by the architect noting the nature and methodology of the works and how they are to proceed including time frames for each stage, equipment to be used and work practices.
- A report on the third party properties adjacent to the works which identifies any existing defects. Such a report usually includes photos and detailed premises description. This report would again be compiled by the architect after inspecting with you and the owner each adjacent premises. This report should be carried out prior to commencement of any works.
- Planning Authority permits and site plans
- Some insurers also ask for an engineer’s report for any cranes/ tower cranes which are to be used on site. All owners of such equipment are required to inspect their vehicles yearly and should therefore have a report available.
Insurers usually are very reluctant to quote unless they have all the required information and therefore it is very important to provide all the requested information to enable Insurer’s to underwrite and assess the risk.
Site inspection by an Insurer’s appointed architect may also be required in which case the insurer would pay for any survey it commissions (this in addition to providing the reports and statement that would need to be prepared by your architect). During such surveys, it is important that your architect is present on site.
What will affect the premium under the policy?
The factors which usually affect premium include the duration and nature of the works (such as if it includes large portions of excavations or alterations to premises which will remain in use during the works) being undertaken and the situation of the contract site (mains roads, sites in a clay and/or flood areas usually attract higher premiums). Insurers will also assess the liability risk which would have a bearing on the premium being charged. This together with past claims history for the same type of risks for both you and the contractor and the cost of the whole project. The more complete the information given to the insurers, the more accurate the assessment of the risk will be, and the more advantageous the premium will be for you. Therefore, it is of utmost importance to provide all the information the insurer will require at underwriting stage.
Would there be a return premium if the works are finished earlier than estimated?
No this type of policy is not usually subject to a return premium, however this is at the discretion of the insurer as is any additional premium which may be due should the policy need to be extended or the contract value needs to be increased. It is important to notify the insurer in writing when the works are ready.
Are there usually any particular terms and conditions included under such policies?
Yes, depending on the nature of the works an insurer might deem fit to include certain conditions relating to safety on site, method of working during certain phases of the works and conditions relating to equipment and its uses. Many of these warranties are part of legislation relating to health and safety and employment safety legislation and even if not stated on the policy, these need to always be complied with during the works. These should be read carefully and refer with the insurer if in doubt as to their exact meaning. It is also very important to discuss these with your architect/site manager in order to make sure all the works comply with the said conditions. One important terms is to always notify the insurer should there be any changes in the plans due to unforeseen circumstances such as a requirement by MEPA. Should the insurer not be advised immediately, your position may be prejudiced in the event of a claim. New Architects Method Statements and plans may be required in such events. The excess (that part of a claim which an insured is liable to pay) may also vary depending on the nature of works which is generally on the high side due to the nature of the risk involved. The excess also has the purpose of increasing your interest in loss prevention and safety measures.
Yes. Some contractors would have an annual policy which covers all their work on the different sites at which they might be undertaking and subject to their insurer’s underwriting consideration, you may be included under this policy. In such instances, one should always ask for a copy of the documents noting your inclusion as Principal or Employer (the terminology varies in different Contracts) together with a copy of the policy which would be required in the event of a claim. This should always be discussed with your architect to make sure that all is in order. An additional premium might still be charged which may be more or less than required when issuing a policy yourself to cover your works. It is important that you always try and get different quotations in order to be able to compare prices with the terms and conditions being offered. If the renewal date of the policy is during the contract works, it is important to ask the contract or his insurer for a copy of the renewal document to ensure that the policy is still in force.
Payment protection insurance (PPI)
If you had Payment Protection Insurance and it was mis-sold to you (i.e. the policy is not suitable for you or the provider didn’t include essential information about the product characteristics or gave misleading information that PPI is compulsory or there are limitations in coverage etc.) you may lodge a complaint.
Completing the Insurance Proposal Form
When buying insurance, be it motor, travel, home or life policy, you are required to complete a proposal form. A contract of insurance is based on the principle of utmost good faith and the information contained in the form will be the basis upon which the insurance contract between yourself and your insurer will be concluded. It is the responsibility of the person requesting insurance (“the insured”) to reply correctly, to the best of his knowledge, to all the questions in the proposal form.
Maltese courts have pointed out that it is the duty of the insured to inform and disclose to the insurer the information requested in the proposal form so that the contract may be entered into on an equal footing. Should at any point, during the duration of the policy, the insurer discover that important information had been withheld by the insured, it may choose to cancel the policy and reject any claims. In addition, the insurer may also have the right to claim back any money which it may have paid in claims.
Normally, you are asked a series of questions which would help your insurer understand who you are and what risk you pose. These may include personal questions on your criminal conduct, health and income. Remember that the employees of the insurer are bound with professional secrecy and information you provide to them will be used strictly in relation to the insurance policy you are applying for. Your answers will form the basis as to the type of cover you are offered and the premium you are charged.
Apart from the usual personal and contact details, the information you are asked by your insurer varies depending on the type of cover purchased.
The Risk of under Insurance
Insuring your home buildings and contents or vehicle for less than the actual value, whether deliberately or genuinely, could result in less premium paid. However, should a loss occur, the reduction in claim pay-out would by far exceed any marginal savings in insurance premium.
In order to avoid being under-insured, always check that you have enough cover when you are renewing your insurance or changing insurers.
You could be underinsured because:
It's hard to estimate what it costs to rebuild a home with its permanent fixtures and fittings; or
The insurance policy may have been bought more than three years ago and you may not have updated the level of cover since; or
You may have completed renovations which increase the value of your home.
You can also be under-insured for your home contents if you don't have enough home contents insurance to replace your things, especially jewellery and electronic items. If you are in doubt as to how you should calculate the values to be insured, take advice from experts in the area. An architect could help you arrive to the rebuilding cost of your home, a jeweller could provide you with a valuation of your precious items and a motor surveyor might assist with your vehicle’s market value.
Most people only read their policy and verify the sums insured when they need to make a claim. Unfortunately, by that time, it is often too late. Check your policy now to see how much your insurer will pay and under what circumstances. Also check when your insurer will reject a claim and see that all the sums insured make sense.
A way to insulate yourself from the most serious effects of under-insurance is to purchase a home policy which pays out on a new-for-old basis. This would mean that the insurance company will replace the item which you are claiming for with new ones of the same make and specification. This is however based on the premise that the sum insured reflects the value of the item at the time of loss and there is no deliberate under-insurance.