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| Car Insurance |
The following advice should not be taken as the
definitive answer on car insurance worldwide. It is merely a
non-expert’s view on what to look for when exchanging
cars, and on how to approach the business of confirming that
your have adequate insurance cover for your holiday.
If you would like to exchange cars, now is the time to check
if your policy will allow you to add a named driver, and that
there are no ‘small print’ clauses which would exclude
someone because they do not have a British driving license or
for some other reason such as nationality. If in doubt, ask
your broker or car insurance company. But remember, if your
policy allows you to add a named driver, and it does not exclude
foreigners, then they are by definition included - assuming
of course that they have a full license and a clean driving
record.
Consider whether you want to make a written agreement with your
exchange partner as to who pays the insurance excess charges
in the event of a claim. The excess charge usually means the
non-claimable part of an insurance claim, typically £50
to £200. Most exchangers agree to pay this excess if they
involve their exchange partner’s car in an accident.
Take care if you are offered a printed form to sign, particularly
one that seems to demand that you insure the other exchange
partner for various types of risk whilst showing little or no
understanding of the cover which your policy provides them.
There are often significant differences between the car insurance
laws and practices of different countries. For example, you
might find that a Canadian wants you to agree to pay four years’
worth of ‘no-claims discount’ in the event of accident.
You have probably already paid your insurance company for a
protected no-claims bonus. Thus the Canadian is asking for a
major commitment on your part, but is offering nothing worthwhile
in return. If you find yourself in this situation, you should
consider crossing out this one-sided clause before signing the
form and informing your exchange partner of the reasons. A particular
area to watch is third party cover. Your policy is likely to
include a very high or possibly unlimited level of third party
cover for the other driver. If that driver is Canadian or American
it is quite possible that his/her car insurance policy includes
a mere $25,000 - $50,000 of third party cover for you. Ask them
to upgrade the third party cover to $500,000 or more, and get
a photocopy of the amended policy.
When approaching your car insurance company to confirm cover
for your exchange partner, it is not necessary to say that you
want to swap cars with a foreigner. The fact that you will drive
the other partner’s car is irrelevant in this situation.
The company may assume that you’re involved in some sort
of commercial arrangement and point to a restrictive clause
in your policy. We suggest you simply ask for confirmation that
your policy can be amended to cover a named driver. You should
of course be able to confirm that the particular driver is not
excluded on the grounds of nationality, race or creed by some
clause or other catch-all in your policy’s ‘small
print’.
If doing a car exchange is important to you, and your car insurance
policy will not cover you adequately, changing your policy may
be the best option. If you have difficulty obtaining an annual
policy that will cover your exchange partner, please call us
for the names of suitable companies that other members have
used in the past. By the way, we do not know of any company
which will issue car insurance for just the period of an exchange;
the only options seem to be to make sure your annual policy
gives you the cover you need, or to change your policy for a
better one.
Having read this page, you may wonder if it’s worthwhile
trying to agree a car exchange! It is, in fact, very worthwhile,
and it is almost always satisfactory and successful. The vast
majority of car exchanges are undertaken without any problems
whatsoever, and this advice therefore addresses only the one
or two cases where a member may be having some difficulty.
Lastly, if you are having a problem getting what you want from
your car insurance company, consider cancelling the policy and
going to a company which understands your needs. You should
be able to get a full refund of the unused portion of the policy. |
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Consumers' Association
'Which?' magazine |
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Sunday Times article,
19 Jan 2003 |
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