Motor Insurance

Motor vehicle insurance is a contract by which the insurer assumes the risk of any loss the owner or driver of a car may incur through damage to property or persons as the result of an accident. There are many specific forms of motor vehicle insurance, varying not only in the kinds of risk that they cover but also in the legal principles underlying them.

Some Basics

Why do I need to buy a motor insurance?

The law requires you to have motor insurance before you drive a car (or a motor cycle). The Motor Vehicles Insurance (Third-Party Risks) Ordinance requires all motorists to be insured against their liability for injuries to third parties (including passengers) and for damage to third party property resulting from the use of a vehicle on a road. It is against the law to drive your car or allow others to drive it without insurance. The basic level of motor insurance which you must have is Third Party Cover and therefore you cannot chose to exclude such a cover for passengers. Covering your car against the risk of loss or damage is optional.

Are there different types of motor insurance policies?

Yes there are three main types of motor insurance policies.

    1.    Third Party Only 

This policy gives you the minimum cover required by law. It covers your liability towards third parties if you injure them or if you damage other people’s property while using your car. This includes cover for passengers in your vehicle (and the pillion-rider for motor cycles).

• This policy does not cover damage to your own car or property.
• The premium payable under this type of cover is likely to be less costly compared to the two types of cover explained below. Premium payable under this policy is not based on the value of your vehicle.
• Given that you do not have own damage cover for your own car, if it is damaged in an accident for which you are not to blame, you cannot make a claim under your own policy. You need to request compensation from the insurer of the person responsible. Your own insurer may only be able to provide limited assistance and advice.

2. Third Party, Fire and Theft

This policy covers your liability towards third parties as in (1) above plus any damage to your car resulting from fire or theft.

• Given that you do not have own damage cover for your own car, if it is damaged in an accident for which you are not to blame, you cannot make a claim under your own policy. You need to request compensation from the insurer of the person responsible. Your own insurer may only be able to provide limited assistance and advice.

3. Comprehensive 
   
   This policy is sometimes called “full cover”. Besides covering your liability towards third parties for injury or property damage, it also covers your own car against any kind of accidental damage even if it is caused through your own fault.You must at least purchase a “Third Party Only” insurance cover to drive a car. However you are free to choose whichever cover you want depending on your needs.Once you purchase a motor insurance policy, the insurer usually gives you three documents:

• The Certificate of Insurance;
• The policy document which sets out all the terms and conditions related to your insurance cover; and
• A receipt of payment (make sure you keep the receipt, especially if you are paying by cash).

The Certificate of Insurance is issued annually, upon renewal. Prior to issuing a Certificate of Insurance, the insurance company would need to ensure that your vehicle is road worthy. It is your duty – and not the insurer’s – to ensure that your vehicle is roadworthy. This is a policy condition and the insurer takes no action to check the vehicle.

The policy document is given to you when you start a new policy with an insurance company. You will not be given another policy document on each and every renewal – so make sure you keep all your renewal notices, certificates and receipts with your policy document. If your insurance company amends any aspect of the policy document, it will send you an endorsement with your renewal notice. The endorsement will specifically state which part of the policy document has been amended.

You may even purchase additional benefits to top up your comprehensive policy such as cover for a replacement vehicle in case of a breakdown or protection of the non-claims discount. Ask your insurer/ insurance intermediary for details of possible extensions.

If you are renewing or purchasing a new policy online, make sure that you go through the documentation that is sent to you by e-mail. Check if you would need to contact the insurance company for any documentation you might have to collect from their offices if this is not supplied electronically.

Your Insurance Premium

What determines the premium of my motor insurance policy?

The cost and availability of motor insurance cover will be greatly influenced by:

• The level of insurance cover

If you are opting for a comprehensive cover be prepared that you are going to pay more than if you opt for a third-party only cover.

• The type of vehicle

If you require cover beyond Third Party Only, the state and age of your vehicle are important as they will affect the availability of spare parts and the level of repair costs. A powerful, expensive vehicle will cost more in terms of spare parts and repairs.

• The age of the driver/s

Information about drivers affects the premium significantly. The insurer will require details not only regarding your age but also regarding the age of any person you allow driving your car. The younger you or any driver are, the higher the premium will be. Statistics and experience have shown that mature drivers have fewer accidents than young inexperienced drivers below the age of 25. Restricting the number of drivers on your car may result in a discounted premium.

• Your “No Claims Discount” (NCD)

If you have a full NCD, your premium will be reduced considerably.

• Your past accident record

A clean driving record will obviously result in a lower premium than that for a person with a record of accidents or serious traffic violations. Past claims may also influence the premium charged.

• The nature of use of the car

Social, domestic and pleasure purposes, business purposes, commercial purposes, car hire, etc. Furthermore, if you install a car alarm, you may be entitled to a reduction in your premium.

• Insuring more than one vehicle

You may be entitled for a discount on your premium if you insure more than one car with the same insurance company.

Which extra charges would I incur should I decide to change my insurance cover?

Apart from the additional payment to compensate the increase in premium, the insured would be liable for payment of document duty which is payable to the Commissioner of Inland Revenue.

When your policy is up for renewal, shop around for alternative covers with other insurance covers. Do your homework well before you renew. If you renew your policy with the same insurance company and then find another company (which may offer you cheaper insurance, for example), you may be able to claim back the document duty you had paid from the Commissioner of Inland Revenue (your insurer is unable to refund document duty). If you decide to switch after you have already renewed your policy, you have to pay the document duty again.

You might not be able or entitled to receive a full refund of any premium you had paid.

If you are entitled to receive a refund of premium, it is likely that such refund is not calculated on a pro-rata basis. Insurers normally apply stepped rates (known as “short period rates”) when calculating refunds – your policy would generally include a section about refunds of premium and how they are calculated.

How do I decide on the value of my vehicle?

It is YOUR responsibility to establish a reasonable market value for your vehicle. The market value should not be mixed up with the value you would have been willing to sell your car for (and for which you might have found a buyer). If you disagree with the market value, it may be appropriate to obtain an opinion from a qualified motor surveyor (your own insurer should be able to suggest one) to ascertain an independent view.

The insurance company or insurance intermediary will be able to guide you on the basis of a Motor Vehicle Values Guidebook published annually by the Malta Insurance Association (MIA).

This value will serve as a guide for the market value of your car and hence the value referred to in the event of a claim. You should change the value of your vehicle at each renewal unless you have Third Party Only cover (where the premium is not based on the value of your vehicle). It is your responsibility to do so – not the insurance company’s.

Each time you revalue your vehicle (usually downwards), your insurance premium will also reduce unless you already pay the minimum premium, which differs between insurers. Once the premium applicable to the market value reaches minimum level, further reductions in value will not reduce the premium.

You should ask your insurance company about the minimum premium.

When you receive your renewal notice, ask your insurer or insurance intermediary for the revised value on the most recent published guide. Check carefully when the last report had been published. If the value suggested to you is based on a report which had been issued more than three months from the date of your renewal, the value might need not be realistic.

In fact, if you disagree with the value on the guidebook, don’t attempt to come up with a value yourself!

You may consider contacting a qualified surveyor to value your car on an annual basis., The surveyor would prepare a valuation which you could then present to your insurer or insurance intermediary prior to renewal.

You should always ask a surveyor to prepare a valuation where the vehicle is a rare or unique model, has a very low mileage, is in a showroom condition or has many non-standard extras.,

Keep in mind that a valuation does not have a “validity period” and, for the purposes of compensation, the value of the vehicle is the market value at the time of the accident.

Your insurance company would not cover you for any expense you incur for appointing the surveyor If the value suggested by the surveyor is higher than that in the guidebook, double-check with the surveyor. You might end up paying a higher premium for nothing. Also remember that a valuation will only accurately show the value of the vehicle at that particular moment in time. Changes in the market that occur afterwards (such as an introduction of a new model or a change in the registration tax) may result in that value being no longer accurate.

If you keep the value of your vehicle at an amount higher than the guide indicates, the insurer will still pay your claim on the basis of the market value, not on the higher amount you declared on your insurance policy.

The guide shows the values of vehicles on the basis of certain assumptions particularly those regarding the condition of the vehicle. The value of your vehicle is subject to constant changes throughout the year and will be affected by various factors some of which are the mileage, the level of care and maintenance exercised by the owner, the supply and demand for the particular vehicle and the particular model and specifications.

The issue of having the correct valuation of a vehicle assumes its importance also in the case where following an accident the vehicle is damaged “beyond economic repair”. In such a case, the insurer would determine that the repair costs are so excessive that the vehicle becomes “beyond economic repair”. For example, depending on the vehicle’s condition, some insurers may apply a threshold of 60% on the vehicle’s market value to determine whether to repair or not. Usually the insurer informs the claimant about this and will make an offer – either as cash settlement for the market value of the vehicle or alternatively, the insurer will obtain a realistic and valid value for the wreck and will pay the difference in cash.

If you claim under your policy, the liability of an insurance company in your regard is limited to the reasonable market value of the motor vehicle immediately prior to the loss or damage (referred to as the pre-accident value) but limited to the estimate of value you declared at last renewal. Therefore, the insurance company may not necessarily pay the same amount as the market value set at last renewal if you under-valued your car.

Moreover, if your claim is paid by the third party’s insurance company (which has admitted liability), such company is not even obliged to refer to the value declared at last renewals as there is no contract between you and this insurer. However, it may choose to be guided by the value which was established by a qualified surveyor at last renewal.

Whichever way a claim is made, an insurer is duty bound to indemnify you – this means putting you back into the same financial position you were in prior to the accident. Through its appointed surveyor, a market value of the damaged vehicle would be established – this is normally referred to as the pre-accident value and is shown on the surveyor’s report. If you disagree with the market value, it may be appropriate to obtain an opinion from another surveyor (perhaps your own insurer may suggest one) to ascertain an independent view. Ultimately you would need to have in hand professional evidence that the pre-accident value of the vehicle was higher than that determined by the insurer.

What is a ‘No Claims Discount’ (NCD)?

Motor insurance is renewable yearly. The No Claims Discount is the reward you are given for not claiming on the policy for the past 12 months. Scales do vary but usually range from 20% for one claim free year up to 65% or more after four or five years. This discount is not lost if you change your vehicle or your insurer. You cannot transfer your discount to third parties, the only exception being your wife/husband.

If you choose to change your insurer, the new insurer will need to obtain written confirmation from your previous insurer regarding the No Claims Discount (NCD) you are entitled to. There are various discount schemes offered such as Protected No Claims Discount or Careful Drivers Discount. Ask your insurer or insurance intermediary for details of these discounts.

What are the factors that provide for eligibility for the transferability of the No Claims Discount (NCD)? What happens in those scenarios involving husband/wife; father, mother/son or daughter? Do insurers allow transfer of NCD to third parties?

The general rule is that the No Claims Discount is not transferable.  It is earned by an individual only if he/she has held an insurance policy in his/her name and has not registered any claims in the period.

There are exceptions to the above –  from a legal perspective one should note that since the NCD is a form of intellectual property, it falls under the property acquired during the marriage and thus is owned jointly by both spouses and hence attributes to the concept of the “community of acquests”.  It is thus possible to transfer NCD earned by one spouse to another.

However, the NCD is not transferable from one person to another in any other circumstance.   It is of course possible for an individual to transfer NCD from one policy to another and one insurer to another, even if these are in different countries.   The percentage of NCD that is transferred will vary according to each insurer’s rules and practices.

When transferring from another insurer, the general rule is that insurers will allow the NCD that the person would have earned had he/she been insured with them during the period he/she had been insured with the other insurer.   It is normal for an insurer to verify the NCD entitlement with the previous insurer.

Typically in those scenarios where a policy upon which NCD has been earned is left to lapse, most insurers will be willing to transfer that NCD to a new policy, as long as no more than 24 months have elapsed between the lapse date and the inception date (of the new policy).

Insurers do recognise that the NCD system prejudices those who are purchasing insurance for the first time and thus have no driving record, and those who have a good driving record but under a policy issued in someone else’s name.  In such circumstances, some insurers allow “initial” or “starter” discounts.  These are not however considered as NCD and usually apply only to the first year of insurance, after which the normal NCD system starts to apply.

Will I lose my No Claims Discount when I claim?

In the case where you make a claim and you have the minimum Third Party Only cover, you will lose your No Claims Discount (NCD). On the other hand, if you have a higher level of cover such as Third Party Fire & Theft or Comprehensive Cover, then you will only lose part of your NCD if you make one claim. The reason is that nowadays, most insurers offer a “step-back” scale. Normally your NCD will step back by two years instead of going back to zero.

Not all insurance companies apply the same methodology for the “step-back” of the NCD. Your policy document should clearly indicate how the insurance company will calculate the NCD in the event of a claim.

Some companies offer the option to “protect” your NCD for the payment of an additional premium. This means you will not lose your current NCD if you make just one claim. Check with your insurance company whether you benefit from NCD Protection cover.

Will I still lose my No Claims Discount if I am not to blame for an accident?

NCD is automatically lost when you make a claim, irrespective of, whether are to blame or not. However, if the insurers of the third party admit the blame and agree to compensate you, your NCD will be restored when your insurer recovers all the amounts they have paid for your repairs from such third party insurers. Your excess will also be refunded. Any refunds due to you will not be forfeited if you change your insurance company

Would I be entitled to receive a refund of premium if I reach the age of 25?

Generally speaking, the annual premium is revised on renewal taking into account facts such as vehicle use, drivers’ ages and claims experience, which could change during the preceding year.
Insurers would normally apply additional premium (usually referred to as “loading”) on the basic premium for drivers between 18 and 24 years. Loadings charged by the market vary from company to company. Some companies may also make a distinction between loadings where the young driver is the principal driver and when the young driver is an additional named driver.

When a driver celebrates his 25th birthday, this “loading” is removed. It is not only the additional premium which is affected. Many insurers would also, for example, reduce the excess which may be payable in the event of a claim. In effect, this means that the policy may need to be amended (some policies have automatic provisions for this) and an endorsement with the relevant changes may need to be issued.

Some insurers may, on renewal, be in a position to calculate the exact annual premium due taking account of the period when the loading is no longer applicable and without the need for the policyholder to ask for the refund. Not all insurers offer this arrangement, however.

For example, some insurers would advise that, as soon as the principal driver or any of the additional named drivers under a motor policy turns 25, the former (i.e. the principal driver) would be required to submit a request to the insurer for a pro rate refund of the premium. Such request may be done in writing and some insurers may also ask for a copy of the identity card of the 25 year old driver. In the process, the insurer would also issue an endorsement to the policy.

Some insurers would insist that the request for a refund is made by the main policyholder, rather than the additional named driver, even if it is the latter who has reached the age of 25. This is because the contract is between the insurer and the policyholder and not between the insurer and the main driver of the insured vehicle.

No refunds would usually be accepted when the policy does not name the drivers (in this instance, the policy would allow any driver over 25 years to drive the vehicle and by default, drivers under 25 years would not be covered under the policy).

Some insurers would not normally accept a request for back-dated pro rate refunds. For example, a policyholder who informs his insurer, say, two months after his turning 25 years of age, cannot expect the refund to be so backdated.

Insurers are unable to give a refund on stamp duty in the event of a refund on premium. More information about this aspect may be obtained from the insurance companies or the Commissioner of Inland Revenue.

Lastly, it is important to shop around for the policy which best suits one’s needs. A policyholder may also seek the services of an insurance broker who would be able to provide advice about the various insurance policies available on the market. It is also important for the policyholder to ask for a written quotation prior to renewal, and to inform an insurance company about any changes which might occur during the period of insurance.

If I decide to drive my car abroad, would my insurance policy cover me for any accidents which may occur in a third country?

All motor policies automatically provide third party cover if you drive your vehicle in any EU and EEA country. This means that, if you drive your car anywhere in the EU and EEA, your insurance policy will cover you for any injuries or damages to third parties at no additional expense. Always keep in mind however that an insurer expects you to use the car predominantly in Malta and only for short trips abroad. If you will be spending considerable periods of time abroad then this is a material fact that you are obliged to reveal to your insurer. Some insurers may not be willing to insure your car if it is not normally based in Malta.

If you have a third party fire and theft or fully comprehensive insurance policy, such cover would not be automatically extended if you are driving abroad. If you wish to have such additional cover while driving abroad, you would need to pay additional premium to your insurance company.

You should check with your insurance company about the extent and type of cover your policy extends when driving your vehicle in the EU and EEA. You should enquire about extending your vehicle breakdown and recovery service to those countries which you shall be visiting. This will come in handy if you happen to need roadside assistance or recovery at a local garage and it might also include alternative transport.

You should always check if you need a Green Card prior to your departure.

The Green Card is an international third party motor insurance system based on the Uniform Agreement between Bureaux and the Multilateral Guarantee Agreement and such other agreement which may come into force from time to time. If you are driving in a country outside the European Union, you will certainly need a Green Card.

If you are travelling with your car throughout the European Union, you do not need a Green Card. Instead you will need your certificate of insurance, your driving licence and your log book. Some insurance companies, however, may issue a Green Card free of charge to their policyholders. A Green Card will however facilitate matters for you if you are involved in an accident as it is an internationally recognised document.

You will also need a European Accident Statement  Form that you will need to fill if you are involved in an accident. Your insurer should provide you with this prior to your departure.

Remember to ask your insurer for information if you are involved in a traffic accident while abroad. An insurance company is obliged by law to have a claims representative in each EU member state. The claims representative has a duty to handle claims against you from third parties in the country which you are visiting but should also be able to assist you with any damage you suffer abroad. Always contact your insurer in Malta immediately you have an accident abroad so that they can provide you with the necessary guidance.

Remember to ask information about the insurer of the third party if you are involved in a traffic accident while abroad. All insurers are required to identify and appoint a Nominated Representative (also known as Nominated Correspondent) in each other Member State of the European Economic Area (EEA). This enables you to make a claim in your own country of domicile should you have been involved in an accident whilst travelling in another country of the EEA.

The representative of the foreign insurer is required to hold the necessary authority to handle and settle claims after having collated all the relevant information about the accident and negotiated an equitable settlement.

In cases where liability is not contested and the compensation claimed has been quantified, the Nominated Representative is required to make a reasoned offer for compensation by not later than three months from the date when the claimant submits a compensation claim.

In cases where liability is declined, the Nominated Representative is required to provide a reasoned justification for such declinature within the same timeframe.

You may identify the name of a nominated representative by making an enquiry with the Information Centre by telephone +356 25608136 / 2560814, facsimile +356 25608167 or email [email protected]. The Information Centre will be able to inform you about the insurance status of a foreign vehicle and the insurer’s representative in Malta.

How does an insurance company deal with the transfer of a vehicle?

You may decide to transfer your car by selling it. However keep in mind that your insurance company is responsible for all the claims until the transfer is officialised and formalised with Transport Malta. Once requested to do so, the insurance company must terminate the insurance policy and must inform Transport Malta of such change. Normally an insurer is unable to cancel a policy unless you present proof that the transfer has been effected, such as a copy of the logbook showing the new owner. If you fail to notify your insurance company prior to transfer of your vehicle to third parties, your insurance company may possibly refuse to pay any claim if they occur after the transfer to third parties had been made.

What other discounts can I get?

Most insurance companies may offer additional discounts if:

• you limit the authorised drivers;
• you choose to increase the excess;
• you insure more than one vehicle;
• you have an approved car alarm installed in your vehicle; and/or
• you also have a household insurance with the same insurer.

Claims

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 profits 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?

1. 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.

    2.    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.

  3.    Contact the Office of the Arbiter for Financial Services

You can lodge a complaint with the Office of the Arbiter for Financial Services in terms of Act XVI of 2016 – The Arbiter of the Financial Services Act, 2016.

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

4. 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.

Repair Works

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.

Other Information

Elderly Drivers

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.

Road Rage

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

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.

1. What type of insurance policy do I need?
2. The market value of my vehicle is not on the Guidebook. How should I establish the value for my vehicle?
3. If I am involved in an accident tomorrow, what kind of cover can I expect from my motor insurance policy?
4. What discounts/additional costs apply in my case? How can I reduce my premium?
5. What optional cover is available?
6. I drive an old car. Do I need comprehensive cover?
7. Who is covered in my car policy?
8. What is my excess? Do you recommend my increasing it?
9. Can I reduce my premium by choosing a larger excess?
10. Would I be able to hire a car while my car is being repaired following an accident?
11. I have changed my insurer. Does this mean I will lose my No Claims Discount?
12. How can I protect my No Claims Discount?
13. What service should I expect if I am insured on a Third Party Only or Third Party Fire and Theft basis?
14. I use my car only for a Sunday drive. Does this affect my motor insurance?
15. I am buying a new car. Will the type of car I choose affect my insurance rates?
16. Does it make a difference as to what insurance I should get if I buy a new car or a second hand one?
17. 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

Useful Tips

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.