What is health insurance?

Health or “Private Medical” insurance is designed to cover the costs of private medical treatment for curable short-term illness or injury (commonly known as acute conditions). Most people buy this type of insurance to gain the reassurance that in the case of illness or injury the treatment will be available promptly. As a private patient you can choose when treatment will take place, the specialist who treats you and the hospital where you receive the treatment.

As with all insurances, make sure you read your policy document to familiarise yourself with its terms and conditions.

How do I choose the right cover?

When looking at cover, it is useful to know that treatment is often categorised in the following way:

1. In-patient Treatment. This consists of treatment you receive when you are hospitalised and have to stay for one or more nights.
2. Day-patient Treatment. This is sometimes referred to as day-care, or day-case. You may need to go to hospital for treatment or investigations without the need to stay in hospital overnight.
3. Out-patient Treatment. This consists of treatment you receive from your doctor or consultant which does not require you to stay in hospital either as an in-patient or day-patient.

There are various policies with varying levels of benefits – starting from low-cost schemes, offering limited cover, to those which offer wide-ranging cover and benefits. Most schemes offer cover for both in-patient and day-patient care, but do not always offer a full refund.

Some are limited to cover treatment in the Maltese Islands whilst others are extended to cover treatment overseas as well.

It is important to note that benefits described as ‘full refund’ will be limited to what the insurer considers as “customary and reasonable” charges. When an insurer determines the amount that is "customary and reasonable" for a claim, it examines the amounts it had already paid in claims for those services as well as the "reasonable cost of service" for your particular medical condition. Unfortunately, getting access to that information may be difficult for patients. Some insurers publish these rates on their website. However, medical practitioners are not bound by these rates.

It is best if you ask the doctor's office how much the medical intervention is going to cost. Once you have that amount, call your insurer, explain that you have an appointment for a particular service, and you need to know the customary and reasonable rates for that service.

Insurers usually have agreements with private hospitals to enable direct settlement with the hospital provider concerned. This depends on the level of cover you have chosen. Direct settlement may not be possible with some medical practitioners. You should therefore check with your insurer before undergoing treatment. This can be done either by calling them or by referring to their website.

Choose the scheme or plan that suits your requirements and budget.

How do I join a Health Insurance Scheme?

You may approach an insurer or insurance intermediary. Not all insurance companies or agencies offer this class of insurance. So shop around.

You will be required to fill in an application and this must be completed with full details of all the persons to be insured. Remember that failure to disclose relevant information could invalidate your insurance cover.

What should I do before buying health insurance?

Before you buy private medical insurance, you need to understand the following:

• You agree to give the insurance company all the information (including detailed medical history) it needs. If you don’t give accurate details, your insurance company can refuse to pay your claim or could cancel your insurance cover.
• A medical insurance policy is an annual policy, renewable every twelve months. You can choose to pay either annually, quarterly or monthly if the company offers such options. If you don’t pay instalment premiums, your cover will stop.
• The cost of your premium may increase when you renew your cover.
• If your insurance company plans on making changes and improvements to a scheme, policyholders will be informed before their next annual renewal. Policyholders can continue with their cover on the new scheme which would replace the expiring schemes.
• If you change insurance companies, you may not be covered for conditions or treatments that your existing policy covers.

Once you have received your policy, read it carefully. Make sure you understand what you are covered for or not covered for. Read the policy wording in full and ask questions if you don’t understand anything.

You must keep to the terms and conditions of your policy.

Will I need to provide details of my health?

Insurance companies may accept your application for health insurance cover on the basis of a medical history declaration. This is known as “Medical Underwriting”.

You will be asked to fill in a proposal form which will include full details of your medical history and that of any members of your family to be insured. The insurer may then decide to obtain further medical reports and may also approach your family doctor or check your hospital records for further details. Based on the information you provide, the insurer will decide the terms and conditions of your cover. Insurers and insurance intermediaries are bound by law to treat all such information under strict confidential terms.

What will affect my premiums?

The following factors can affect your premium:

Increase in medical costs is the major cause of increases in premium. New methods of treatment are improving quality of life at a cost. Most private medical insurance policies aim to cover these treatments as they become established medical practice and available privately. Likewise, the sophistication and complexity of tests used to diagnose illness and injury is also increasing. Such tests are becoming far more widely available in private hospitals.

Moving into an older age bracket will also generally mean an increase in your premium. As people get older they are more likely to need and receive medical treatment.

Joining through a group may entitle you to a group discount.

Your choice of benefits will also affect what premium you pay:

1. Choosing a scheme with more limited cover e.g. a basic scheme or a private clinic rather than a private hospital plan is less expensive. To reduce the premium one can opt for an in-patient only scheme or opt for an excess.
2. Scheme including overseas treatment are more expensive.

What if I want to change to a new insurance company?

It is your choice to change insurance companies. However, a new company may not cover existing medical conditions, which may have developed since you took out your policy. You may also forfeit any premiums you have paid up front. It is best to check with your new company as to how the change may affect your cover.

Can I insure my children or a newborn child?

Children under 18 years of age are minors and cannot be insured in their own name. However, you may insure them as the dependants of an adult i.e. with the mother, father or legal guardian. In the case of a new-born child, most insurers will include your new-born child for free until the next renewal date. Make sure you inform your insurer as soon as possible after birth. Some insurers may impose a time limit for this notification, so check carefully. Subsequently, when your medical insurance policy comes up for renewal you may choose whether you want your child to remain insured or not.

Will the insurance cover be affected if I become disabled?

Insurance companies will not refuse to cover you because you are disabled. As with other pre-existing conditions, your insurance provider may exclude cover related to your disability.

If I receive treatment in a government hospital, can I claim under my medical insurance?

Not all health policies offer such cash benefit. Moreover, such a benefit may only apply according to the scheme you have chosen. If your policy offers such benefit, this is normally subject to you spending at least one night in a non-paying / government hospital or undergoing surgery as a day case. Emergency treatment received at such hospitals does not entitle you to a cash benefit.

What is not covered?

• You cannot take out an insurance covering treatment for a medical condition that you already know about.
• Your insurer will also exclude any pre-existing medical conditions or chronic illnesses. This means that a medical condition that you have suffered from, received treatment for had symptoms of or for which you sought medical advice in the past before you applied for medical insurance may not be covered. This exclusion could be indefinite or for a set period of time. If an insurer excludes a pre-existing medical condition that you suffered from before joining, the insurer may eventually offer you cover for that condition if you do not receive any treatment, advice or medication for a number of years.
• Standard health insurance policies also exclude certain types of treatment such as routine checks, preventive treatment or dental care. Preventive treatment is considered beyond the scope of a health insurance policy since it is predictable and not treating a medical condition.
• Out-patient treatment if you choose an in-patient and day-case cover only policy.
• Most insurance policies also exclude medical visits for routine pregnancy, fertility treatment, sterilisation, treatment of sexual problems, AIDS/HIV and cosmetic surgery, the cost of vaccinations, medical screening and treatment to remove any tissue that is not diseased.
• Certain insurers do not cover congenital conditions except for medical treatment undertaken in an emergency operation carried out within twenty eight days of birth. These are medical conditions existing before or at birth and may be inherited or caused by environmental factors.

Remember that health insurance policies are there to cover treatment by a medical specialist who is a medical practitioner (doctor) who has received specialist accreditation and who is recognized as such also by the insurer. Cover for physiotherapists, alternative treatment practitioners such as acupuncturists etc may be covered under certain policies but will be stated as such in the benefit table. Cover for podology and certain other practitioners is usually very limited if existent at all in most policies.

Therefore, never assume that your policy covers for all medical conditions. Check your policy and, if in doubt, contact your insurer.

How do I make a claim?

Apart from emergency admissions to a hospital, all treatment has to start with a referral by your family doctor who may refer you to a specialist. However, some schemes accept specialist fees without referral by your family doctor for example in certain instances such as visits to gynaecologists, or paediatricians.

These are some important guidelines which you may follow in the event of a claim:

1. Go to your family doctor and ask him to complete your claim form. Your family doctor may refer you to a specialist. Remember, you are entitled to claim back consultation fees or medical fees within the terms of the policy but you are not entitled to a reimbursement of the clinic fee for the use of waiting room facilities.
2. The specialist may in turn refer you to further tests or admit you to hospital. In patient or day care treatment as well as certain outpatient tests require a pre-authorisation from your insurer. Therefore before you commence any treatment you should check your policy and contact your insurance company if necessary. Ask the insurer to quote the particular section in the policy which entitles you to claim under your policy.
3. The insurance company will guide you as to the extent of your cover and whether direct settlement of bills may be effected. If direct settlement is not pre-authorised by your insurer you may have to settle hospital and specialist fee directly and then claim from your insurer. However the hospital may ask you to sign a document guaranteeing payment.
4. You should always check how much the specialist is going to charge for the treatment and verify that the amount is what the insurer will pay. Some insurers may have a list of consultants who do not accept direct settlement and require policy holders to settle their fees and then recover from the insurer. In these cases there may be a shortfall between what the specialist charges and what the insurer is willing to pay.

Do I get my premium back if I cancel my policy?

In certain cases an insured may get a pro-rata refund as long as he/she has not submitted any claims during that policy year, but one needs to check the cancellation clause of the policy.

European Health Insurance Card

The European health insurance Card (“EHIC”) benefits EU citizens by providing them with a single personalised card that demonstrates their right to access public healthcare during temporary visits in another EU Member State as well as in Norway, Iceland, Liechtenstein and Switzerland.

With the EHIC, if you will need unplanned medical treatment while visiting an EU country or Iceland, Liechtenstein, Norway and Switzerland, you will get the same access to public sector health (e.g. a doctor, a pharmacy, a hospital or a health care centre) as a national of these countries. If you receive medical treatment in any of these countries at a charge, you will be reimbursed either immediately or on your return home. However, to receive this beneficial treatment you will need to take your EHIC with you.

It is important to note that the card does not cover your health costs while abroad if you are to obtain treatment for an illness or injury that you had before travelling.

You can either apply online at:
(https://servizz.gov.mt/en/Pages/Health-and-Community-Care/Health/Health-Policy/WEB012/default.aspx)
or  send the relative application form which you can obtain from any Local Council to the Entitlement Unit, Ground Floor, Ex-Outpatients Block, St. Luke's Hospital, G'Mangia Hill, G'Mangia, Malta.

Only persons who meet the following criteria may apply for an EHIC:

If you are an ordinary resident in Malta and you are:

• A national of Malta.
• A spouse or minor child of a Maltese national.
• A non-Maltese national and paying NI contributions or receiving a state pension from Malta.
• An EU or EEA national in possession of a certificate of Entitlement.
• A stateless person or refugee.
• A full time student following a course at the University of Malta or MCAST.

There are no fees for this card.

What is life insurance?

Life insurance offers valuable financial protection in the event of your early death to family members dependent on your earnings. But it may also be a means of saving. This combination of protection and saving makes life insurance unlike any other financial product. Some policies protect, some help you to save and some do both.

A life insurance policy is a contract between the policy holder and a life insurance company where the latter promises to pay the legal heirs or a designated beneficiary a sum of money upon the death of the person whose life is insured.

The life insured need not be the policyholder but can be a third party provided that the policyholder has a lawful “insurable interest” in the life to be insured at the time of commencement of the policy.

This means that for a number of years, you have to pay an annual premium to your life insurance company. When you do a life policy, you have to be sure that you would be able to meet your annual obligations on time and in full. In normal circumstances, you would not be able to obtain the full value of your insurance premium paid over the years if you surrender your policy before its maturity.

Paying for your life insurance policy usually takes two basic forms:

• Single premium: a lump sum is paid at the beginning of the policy. No other payments are made for the whole duration of the policy. Some policies may allow you to “top-up” the amount at particular intervals during the life cover.
• Periodic premium: this can be annual or monthly. A monthly payment would normally incur added charges to the policy holder as a result of added administrative procedures for the insurance company.

Remember that if you decide to change any aspect of your policy at any time during the duration of the life cover, the insurance company may reserve the right to charge you a small fee to cover administrative expenses.

Who may have insurable interest?

The most common form of insurance interest is that which a person has in her / his own life and that of her / his spouse.

Other examples of persons who may have an insurable interest are:

• A person who is likely to suffer financial loss as a result of the death of some other person;
• A person has an insurable interest in the life of a person on whom he depends, either wholly or partly, for maintenance and support;
• A company on the life of a senior employee or shareholder;
• A partnership on the life of a partner.

Life insurance policies are designed for persons with dependents, business people, self-employed persons, professionals, partnerships and employers who may wish to protect their enterprise against death of their key persons.

I have a life insurance policy and in the event of my death, I want a specific person to benefit from the proceeds of my policy. Is this possible?

Under Maltese law it is possible for a policyholder to designate one or more beneficiaries to ensure that the policy pays out quickly and directly to where you want the money to go.

By designating a beneficiary under a life insurance policy, the proceeds payable bypass the law of inheritance and this ensures that the process of getting the money to a designated beneficiary(ies) will, as a result, be significantly reduced.

Beneficiaries may be designated:

1. secretly by the policy holder - in which case the beneficiary will be unaware of this appointment, or alternatively;
2. the beneficiary may be asked by the policyholder to accept the designation. Once a beneficiary has accepted the designation in writing this will grant the beneficiary the rights under the policy as predetermined by the policyholder.

The policyholder predetermines the rights of the beneficiary(ies) under the policy. The life insurance company will then follow the policyholder’s instructions and execute these wishes accordingly.

It is pertinent to point out that all designations of beneficiaries must be specified in the policy. The designation of a named beneficiary can be made either in the original contract that is at the onset or in any subsequent amendment to the policy by way of an endorsement.

In case of a spouse or children of the policy holder, the designations of such persons must also be specified in the policy but such persons need not be named. Unless otherwise stated in the policy, in such cases the spouse and children shall enjoy rights to the proceeds in equal shares.

If no beneficiaries are designated under a life insurance policy, then any proceeds become payable in accordance with the law of inheritance.

Can the name or details of a beneficiary be changed?

The policyholder may revoke or vary the terms of any designation of a beneficiary at any time during the term of the policy. The revocation or modification by a policyholder of a designation of a beneficiary may not however be made by means of a will but the policyholder is required to inform the life insurance company about his/her intention to change or vary the designation of beneficiary under his/ her/ policy.

The heirs of the policyholder may not revoke the designation of a beneficiary after the death of the policyholder. The proceeds and any benefit arising from a contract of insurance, including any surrender value, are due to the beneficiary and form part of his estate, whether or not such beneficiary is aware of such designation. Upon becoming aware of the fact that the policyholder has passed away, the insurer shall inform the beneficiary of his entitlement.

A policyholder may not however revoke or vary the designation of a beneficiary who has accepted the designation. In such instances the written consent of the designated beneficiary would be required.

How can life insurance protect my family?

Loss of income and problems paying debts or meeting tax liabilities can result from loss of life. To help with these costs there are three basic types of life policy – term insurance, whole life insurance and endowment insurance. All these provide you with protection by paying a lump sum on death. People on a limited income may find that term insurance is the best buy. The term (period of cover) can be chosen to cover the time when children are growing up and expenses are high.

Term insurance (or “temporary insurance”) gives you financial protection if you die within a specified period known as “the term”. This period might be 10, 15 or 20 years although you can arrange policies to cover you for periods as short as one month. If you are alive at the end of the term no payment is made and there is no surrender value – meaning that if you stop paying the premiums the cover ceases and there is no refund of premiums paid.

An endowment policy gives the best of both worlds – protection and saving. Although dearer than term or whole life insurance it will help your family’s finances should you die, while at the same time it is a method of long-term saving because it also pays a sum of money if you survive the period of cover.

Whole life insurance gives more extensive protection. You know your family is financially protected whenever you should die.

Some families find a regular income more useful than a lump sum. For them a family income benefit policy could be best.

What is term insurance?

Term insurance is the cheapest form of protection and it can offer high life insurance cover for a low premium. This can be ideal if you have a limited income. Cover can usually be arranged to cover just one person, but in some cases cover will also be available for spouses/partners in the same policy.

There are different types of term insurance;

1. Level Term - You are insured for the same amount throughout the agreed term.
2. Renewable Term - You have the option, after a specified period (usually 5 years) to take out a further term policy without the need for any further evidence of health, providing the policy will not continue beyond a certain age (often 65 or more).
3. Convertible Term - You can convert the policy to a whole life (see below) or endowment (see below) insurance without giving further evidence of your state of health. If you decide to convert, the new policy will usually cost the same as a normal whole life or endowment policy based on your age at the date when you exercise the option. If you have a young family and a limited income these policies might be best. Not only do they provide cheap life cover at the outset, but they give you valuable options in later years if your income has risen or your health has declined.
4. Decreasing Term (Loan Protection Assurance) - The sum insured reduces by a fixed amount each year, decreasing to nil at the end of the term. The premium will normally stay the same throughout the term. These policies are usually used to cover a home loan or other loan as they pay any outstanding balance of the debt if you die early. Remember, though, at the end of the term nothing is payable and there is no surrender value.
5. Increasing Term - The sum insured and premium increase each year by a fixed percentage of the original sum insured. These policies are designed to increase your insurance protection as your earnings increase.
6. Family Income Benefit -  If you die during the term of the policy a regular income is paid to your dependants for the rest of the term. The income can be paid monthly, quarterly or yearly. Some policies provide an income which increases each year at a fixed rate – say by 3% or 5%.

How can I save with a life insurance policy?

The long-term nature of life insurance allows you to make clear plans for long-term saving. Life insurance companies have long and wide experience of successful investment as well as providing protection in the event of your early death.

1. Endowment insurance. This both protects your family and saves for the future. Endowment policies can be issued with or without profits or can be unit-linked (see below). You pay premiums for an agreed number of years – say 10, 15 or 20. At the end of this time you receive a lump sum, which is either the sum insured together with bonuses in the case of a with-profits policy, or - with unit-linked endowments - the lump sum is the return of all money invested together with the investment growth. If you die before the maturity date the insurance company will pay the sum insured – plus any bonuses applicable so far.
2.  With and Without Profits. A with-profits policy lets you share in the profits made by the insurance company from the investment it makes. These profits are usually added to your policy as an annual bonus and once they have been added they cannot be taken away. The amount of bonuses allocated to your policy depends on the profits made by the company. These profits and bonuses cannot be guaranteed in advance but it is likely that bonuses will add significantly to your sum insured, bringing you a good investment return over the years of your policy. The with-profits endowment policy is a means of long-term saving with a minimum of risk and the potential for a good return. It smoothens out fluctuations in the value of investments, although there is no guarantee of the final (maturity) value of the policy. Without profits policies do not share in profits made by the insurance company. The amount paid out on death or maturity will be the basic sum insured only.

What is whole life insurance?

This pays the sum insured whenever your death occurs. Whole life insurance is not limited to a specific period like term insurance. Premiums are usually more expensive because it is certain that the insurance company will eventually pay the sum insured. With some policies you will have to pay the premiums until you die, but with others you may not have to pay premiums any more once you reach a chosen age – say 65 or 80 - but the insurer will pay the sum insured when you die. In these cases the policy is then known as “paid up”. Whole life insurance can be arranged with or without profits or can be unit-linked.

What is a reversionary bonus?

This is a bonus that you do not receive as a cash sum but will be paid at the same time and in the same circumstances as the sum assured. The insurer will add a declared percentage to the sum assured payable under your policy. This addition is in proportion to the sum assured. This can apply to a with-profits policy or an endowment policy. If it is a simple bonus, the declared percentage applies only to the sum assured. If it is compound, it applies to the sum assured plus any previously declared bonuses. The bonus may usually be surrendered for its cash value. Usually, bonuses are declared net of tax.

What is a terminal bonus?

This is an extra bonus payable on with profits or endowment policies that become payable upon claims which are made upon maturity or death of the policyholder. Normally the policy would have to be in force for a minimum number of years to qualify for such a bonus. This is also usually expressed as a rate per cent of the sum assured and any attaching bonuses at the date of the claim. The insurer may reduce or discontinue granting a terminal bonus according to its performance. Read the wording carefully.

What are unit-linked policies?

With a “unit-linked” insurance policy there is no guaranteed sum insured payable except in the case of death. The investment element of the annual premium is invested by the insurance company in your choice of funds. Each fund has various degrees of risks and rewards, depending on its respective investment objectives. Some companies offer a choice of Managed Funds the insurance company manages these investments on your behalf. The value of your policy at maturity is based on the market value of the accumulated units in your selected funds when they are sold.

Insurance companies offer a range of different funds to which your policy can be linked. You should ask for an explanation of the different funds so that you understand the different risks and opportunities. There is no guarantee on the value of the sum to be paid at maturity.

The potential benefit from a unit-linked policy can be much greater than from a with profits endowment policy. But of course there is also a risk that the eventual benefit could be lower. Unit-linked policies are designed for long term investment and as such carry early surrender penalties, these penalties are usually confined to the first five years of the contract, but you should ask as these early surrender penalties vary from company to company.

Appropriateness Test

Before you purchase a unit linked policy, the insurance intermediary is required to assess whether such product is appropriate for you that is whether you have the necessary knowledge and experience to purchase such a product.  This is done through the carrying out of an Appropriateness test.    In carrying out this test, the intermediary will ask you some questions regarding your knowledge and experience can include the types of services and products you are familiar with; the nature, volume and frequency of your previous transactions; and your level of education, profession or former profession.

If the intermediary concludes that you have the necessary knowledge and experience to understand the risks involved in this product, then you may purchase the product.

If the intermediary concludes that you do not have the necessary knowledge and experience, or you have not supplied enough information to enable it to reach a conclusion, then you will receive a warning from the intermediary saying that either it does not regard the proposed product as appropriate or that the information you have provided is not enough to enable it to determine whether the product is appropriate for you or not.  If you insist on going ahead with the purchase of the product, you must accept the risk entailed and you will be provided with a relevant risk warning.

The intermediary may be exempted from carrying out the appropriateness test and proceed directly to the sale of the product to you on condition that::

• the product involved does not have to be a ‘complex’ product;
• You have chosen to contact the intermediary to purchase the product yourself, (i.e. at your own initiative). This means that you are not responding to a personalised approach to you from the intermediary which was intended to influence you in respect of a specific product.
• You will be warned that the intermediary is not exercising any judgement on your behalf.In such cases, you do not have to answer any questions about your investment knowledge and experience, financial situation or investment objectives. The firm may of course ask you questions for other purposes, particularly if you are a new customer.

Suitability Test

You may request that you are provided with advice as to whether such policies are suitable for you in your circumstances.   At this stage, the insurance intermediary or the insurance company distributing the product, will be required to make a personal recommendation to you in this regard and would therefore need to carry out a suitability test to ensure that this product is suitable for you.   In carrying out a suitability test, the intermediary, asks you questions on your financial situation; investment objective and knowledge and experience to ensure that the product in question is suitable for you, in accordance with your risk tolerance and ability to bear loss.

When providing investment advice, the intermediary shall provide you with a suitability statement in a durable medium specifying the advice given and how the product in question is suitable for you.

As part of the Suitability test, you are likely to be asked questions about the following:

• Your investment objectives
  • This can include questions about the length of time you wish to hold your investment, your risk appetite and profile, whether you wish to invest in order to earn income or capital growth.
• Your financial situation
  • Information regarding your financial situation may be obtained through questions about matters such as the source and extent of your regular income, your assets (both liquid assets for example cash as well as illiquid ones like property), any debts you have and other financial commitments.
• Your knowledge and experience
  • Questions regarding your knowledge and experience can include the types of services and products you are familiar with; the nature, volume and frequency of your previous transactions; and your level of education, profession or former profession.

If the intermediary does not, or cannot, obtain the necessary information to assess suitability, then it cannot make a personal recommendation. If you provide only limited information, this will affect the nature of the service the intermediary will be allowed to provide to you.

Do life insurance policies come with any 'extras'?

Some life policies have optional extras:

1. Waiver of premium

If you suffer from a temporary total disablement because of illness or injury, the insurance company will pay your premiums to maintain the benefits under the policy. There are usually time limits stated in the policy for the duration of the disablement.

2. Critical Illness

This provides cover against the risk of you having a serious illness such as a heart attack or cancer. If you develop one of the illnesses listed in the policy a lump sum will be paid. Some insurers offer a regular income for a set period as an alternative to a lump sum payment. This type of insurance can be bought on its own or as an addition to whole life, endowment or term insurance. The following could be the illnesses accepted under the policy: heart attack, coronary artery bypass grafting, stroke, life threatening cancer, kidney failure, major organ transplant, paralysis, blindness, severe burns or a coma.

3. Accidental Death Benefit

This benefit provides additional cover so that if you were to die as a direct result of an accident the insurance company will pay this benefit in addition to the main benefit. The amount of cover under this accidental death benefit can be up to the same amount payable under the main benefit thus doubling the amount payable in the event of death.

4. Permanent Total Disability

This option guarantees the payment of a selected sum assured in case of permanent total disability after a waiting period of twelve months. If you are diagnosed as being partially disabled, the benefit is a percentage of the sum assured depending on the severity of the disability whilst you will remain covered for the rest of the sum assured. The rest of the life cover will remain as the sum assured on death.

These “extras” are sometimes called “Rider” policies because they run alongside the main cover which could be a whole life or endowment.

You should always check with your insurance representative about these “extras” and whether they are suitable for you.

How do I decide upon a life insurance policy?

It takes careful planning to choose the right life insurance policy for yourself, your family or business. It is also important to review regularly your life insurance needs to make sure that they keep up with changing personal and economic circumstances.

When you have decided on a policy you will have to complete and sign a proposal form. This form asks about such matters as your age, occupation and health. You must answer all questions truthfully. If you fail to do so, it can, in some circumstances, mean that your policy will not pay out.

A life insurance policy is a long-term commitment. It is not designed for you to cash in early. Insurance companies and financial intermediaries can help you decide what products are suitable for you. Never surrender a life insurance policy without taking expert advice.

Do I have a right to change my mind?

Every effort is made to ensure your application for life insurance or a retirement plan is made in the full knowledge of all its terms and conditions, but most life policies have a “cooling off” period of not more than 30 days.

Go through the documents you receive following your application to purchase life insurance or a retirement plan. You should be given a form called “Statutory Notice”. This form clearly explains your rights to reconsider your decision to buy long term cover (such as life insurance or a retirement plan). The 30 day cooling-off period starts when you receive this form.

During this time, you have a right to inform the insurer that you don’t want the policy. You are not required to given a reason for your decision.

You are also entitled to receive a full refund of any initial premiums you have already paid. In respect of unit-linked policies (such as retirement plans) you might not receive the full amount if, in the meantime, the value of the units decreased.

The “Statutory Notice” has to be in Maltese and English and easily legible. Go through the questions in the form carefully. If you doubt your decision, act immediately without allowing the 30 days to expire.

With your paperwork, you should also have a “Notice of Cancellation”. You need to fill in this form and hand it over to the person who sold you the policy. As soon as the Notice of Cancellation is served, your policy is cancelled. Keep a copy of the form before you hand it in and make sure that you are given a receipt (or acknowledgment) there and then. The date when you hand in the Notice of Cancellation should be clearly stated.

If the insurer gives you any reward or benefit in the meantime, you are required to pay it back.

The Statutory Notice is not required in certain instances, such as when:

• you are purchasing term insurance in order to obtain credit or loan facilities and such requirement is shown by documentary evidence referred to or attached with the proposal for credit
• you are not the life assured or the spouse or child of the life assured,
• you are not purchasing life insurance as an individual; for example in the case of a group life policy.

What should I expect when purchasing a life insurance product (or any other long term insurance policy)?

• Obtain information about the insurance company issuing the policy. Get the name, address of its head office, whether it is established locally or abroad, and if it is a foreign company, the entity which represents it in Malta.
• Make sure you know the difference between the types of term, endowment, whole life or unit-linked policies. Know which type is suitable for you and why. Ask your insurer or insurance intermediary for a clear explanation of how it works.
• Obtain whatever explanation of the benefits and options of the policy. Keep copies of any written information regarding the product you are purchasing.
• Understand the duration of the policy (i.e. when the policy matures) and how you can terminate it prior to maturity. Note that you may incur extra charges if you decide to terminate your policy before its maturity.
• Know how much premium you need to pay, and when you need to pay it. Ask clearly what charges, if any, are imposed on the policy and take note of them. Ask how much is allocated to your policy (sometimes referred to as the “Investment Premium”). When such amount is expressed as a percentage (such as 95%), it indicates that 95% is actually allocated to your policy (5% is the fee taken by the insurance company). If you pay by standing order, make sure that your bank and the insurance company get exact details of your policy.
• Understand how bonuses are calculated and distributed. Obtain an explanation of different types of bonuses: reversionary or terminal, and the difference between such bonuses. Understand the manner in which they are calculated. Ask if any are guaranteed or not, even if the word guaranteed is written on the information.
• Clarify and understand your policy’s surrender values – that is, the amount of money which you may get over specific periods of time if you surrender your policy. Make sure you establish whether the surrender values are guaranteed or not. If they are only meant to give you an indication of what you might get you are NOT guaranteed that you will receive the amounts shown.
• If the policy allows for supplementary benefits, you have to pay additional premium. Check with your insurer or insurance intermediary the amount and purpose of each additional charge which will be added to your premium.
• Make sure you are given the following two documents, where applicable: (in either Maltese or English)
• Statutory Notice – this document which explains your right to withdraw your decision to purchase a long term policy within 30 days from the date on which you sign this notice.
• Cancellation Notice: You have to sign this within 30 days from signing the Statutory Notice in order to get your money back. If the insurance company gave you some gift with the policy, you also have to return it (unless otherwise stated in the policy).
• If you are given information about past performance, remember that what happened in the past may not necessarily happen in the future. Returns on investments can fall substantially. Ask your insurer or insurance intermediary to give you a pessimistic scenario and not only optimistic. Make sure the returns quoted are realistic in the existing market conditions when you are purchasing the policy.

AFTER YOU BUY

• The Insurance Company may declare bonuses – which once declared cannot be withdrawn. A company may choose not to declare profits on any particular year – if it deems appropriate to do so.
• When an insurance company declares a profit, you should receive a statement with the amount of profit declared. You should also be given the total value of benefits (plus bonuses) which have accrued to your policy. Remember your policy will only participate in profits if it is a “with profits” policy.
• This statement also includes information which explains the contents on such document. If in doubt, check it out!

What happens if I forget to pay my renewal premium?

One of the conditions on your life policy is the Days of Grace condition. This condition allows 30 days’ grace for payment of your renewal premium. If death should occur during these days of grace the claim would still be met and the insurer would deduct the outstanding premium from the sum payable. If the premium is paid on a monthly basis, the days of grace may be reduced to 15 days or none at all. Ask your insurer or insurance intermediary.

What if I need to surrender my life policy before maturity?

If you see no alternative but to surrender your life policy, you should first discuss the problem with your insurer or insurance intermediary.

Always get a written quotation of the surrender value from the insurance company before you make a final decision.

Think twice if someone suggests you surrender a policy with one insurance company and take one out with another company. This is called “churning”” and usually involves you in some financial loss on your existing policy (which would either have to be surrendered or made paid up).

If you surrender, your insurance company has to cover all the initial costs of issuing your policy. These costs include payment of commission, office administration costs policy documentation costs and other expenses connected with issuing your policy. These costs have to be met whether you continue your policy for the full period or discontinue it after only a short time because the insurance company would have incurred these expenses anyway. Remember the administration costs of the insurer under a long term cover are highest at the beginning and therefore the earlier the surrender, the greater the deduction for costs in proportion to the premiums already paid.

So if you surrender your policy, the insurance company has to keep enough money from the premiums you have paid so far to cover all these costs. In addition, allowance also has to be made for the cost of providing you with life cover for your full sum insured. This must not be overlooked as the full sum would have been payable in the event of your early death before deciding to surrender.

A surrender in the early years of the policy means you will get back a little or a lot less than the premiums you have paid. Very often, nothing at all is payable if you surrender the policy within the first year or so.

Ask about surrender terms when purchasing your policy. Any values you may be given are only indicative and are likely to change during the term of your policy.

Points to remember

• Some contracts - term or temporary assurances such as family income benefit policies - do not as a rule ever attain surrender values. This is because these are life policies without a savings element - they provide protection only. They can be compared to household or motor insurance policies which pay out only if a claim arises.
• If your policy is intended to repay a loan - for example a home loan - you should not surrender it unless you have made other arrangements to repay the loan.
• When taking out or changing a home loan, it is usually in your interest to use your existing policies as backing for the new loan. A top-up policy may be required if the new home loan is more than your previous one.
• The cash value of policies linked to investments (such as collective investment schemes) is dependent on the value of your holding in the fund at the time of surrender.

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.

Yacht and Pleasure Craft Insurance

As the name implies, a yacht and pleasure craft insurance is bought specifically to cover vessels which are used solely for private and pleasure purposes.

There is no standard policy for such class of insurance, since cover varies according to the provider and the size and speed of the vessel. As owner of a vessel you may be at risk not only at sea but even when the vessel is being moored, kept in storage ashore or whilst being transported.

Owners must place value on obtaining the right insurance package given the steady rise in the number of vessels in our waters and the high repair and replacement costs. Thus, a yacht and pleasure craft insurance is required to compensate the insured who suffers a loss, either by sustaining damage to own property or by causing liability to a third party.
There are two basic types of insurance cover:

• Third Party Only Cover – in Malta, this type of cover is mandatory for crafts with horsepower engine exceeding 9.9hp. Such cover provides compensation in case of property damage or bodily injury sustained to third parties arising out of the use of the insured craft and for which the insured is found legally liable.
• Comprehensive Cover – this covers the insured being held liable for damages caused to third parties as well as cover for loss or damage sustained to the insured’s craft.

Proposal Form

Since proposal forms are the means through which an insurer may obtain details of the risk being proposed, it is important that a potential policyholder discloses all facts that are considered material to the insurer in order to assess the risk being underwritten, impose conditions and adjust premium accordingly. So, it is important that when proposing the insurance, all material facts are disclosed as non-disclosure may lead an insurance contract to be void. Apart from the personal details of the proposer, a typical proposal form for a yacht and pleasure craft insurance would include information as follows:

Details of the vessel to be insured 

• Registration number;
• Class of Model;
• Length;
• Year of build, and whether it was professionally built or owner built;
• Date and price of purchase;
• Whether any gas bottles are stored on board;
• Whether any fire extinguishers are fitted;
• Sums to be insured (including individual sums for hull and machinery, navigation equipment, personal effects, amongst others).

Details of the engine

• Make, Year of Manufacture, HP, and Serial Number of Outboard or Inboard;
• Maximum speed of the vessel.

Details of use

• Cruising range – whether in Maltese waters or outside Maltese waters;
• User of the craft – whether proposer is the sole user, and if not details of other users will be required;
• Place where craft is kept during the In Commission period;
• Dates of Laid up period.

Some policies require the insured to carry out a survey of his/her vessel. Generally, a survey would be required for amateur or owner-built vessels, for certain vessels which are older than 15 years, or for second-hand vessels purchased overseas and brought to Malta. The insured would be required to appoint and pay for the services of a professional surveyor tasked with carrying out such a survey. Normally, the surveyor report would confirm the condition and value of the vessel accompanied by photos. A follow-up sea trial may also be carried out. Depending on the state of the vessel and requirements of the insurer, such a survey should be carried out periodically (such as every two or three years).

It is extremely important that the values on the policy schedule are updated EVERY year. A Yacht and Pleasure Craft Insurance is an “indemnity insurance” – the insurer is obliged to put the insurer back in the same financial position he was prior to the event which led to the claim but up to the amount mentioned in the policy schedule. The insured should therefore ensure that the values on the policy are current market values and include not only the actual replacement of the machinery or part of vessel being replaced or repaired but also the cost for its installation. It is the insured – rather than the insurer – who is responsible to establish such current market values.

Often, a Yacht and Pleasure Craft comprehensive policy is divided into three main sections: Property Damage, Liability and Personal Accident.

Property Damage Cover/Loss or Damage to the craft

This section provides cover for loss or damage to the insured’s vessel and equipment

Some policies cover such loss or damage only when caused by a named “peril’ whereas others cover loss or damage caused by any external accidental means which are not specifically excluded under the “Exclusions” to the policy.

Perils covered commonly include:

• Theft
• Stress of weather
• Stranding or sinking
• Collision or contact
• Fire
• Explosion or lightning
• Malicious act or vandalism
• Accidents in loading and unloading
• Transit by road or ferry.

A number of the above perils may be limited in scope by certain proviso or limits or conditions.

For example, in the case of collision concerning speedboats, one often finds a limitation on the amount of damage caused to the rudder, propeller/s, strut or shaft, motors, electric or electronic machinery, batteries and their connections caused by impact with submerged objects.

Similarly theft of an outboard engine could be subject to a proviso that the engine is secured to the craft or to the tender with an additional antitheft device. Some policies may limit theft of inboard machinery and equipment solely following forcible and violent entry into the locked cabin, hatch or locker or into the boat’s place of storage ashore.

Therefore it is important to enquire properly about the cover provided and the exclusions to the cover.

This avoids unpleasant surprises at time of claim.

Under the Property Damage section, there are also additional benefits for which the policyholder may be able to claim. These may also vary from one company to the other, but the most common are:

• Sighting costs – the costs incurred for inspecting the underwater part of a stranded craft. This will also be covered, up to a certain limit, even if no damage is actually found following inspection.
• Salvage charges – the expenses incurred in order to safeguard the craft so as to reduce further losses.

In addition, personal effects are sometimes considered to be part of the property being insured. Thus, personal effects that belong to the insured or to family members will be covered up to a certain limit. Such personal effects include clothing and sports equipment, but it may exclude money, jewellery or other valuable papers or documents.

The property damage cover under a yacht and pleasure craft policy is subject to particular conditions. One common condition relates to when the insured craft is in transit. This condition emphasises the fact that whilst in transit, the craft must be carried on a trailer and towed by a suitable vehicle. If such condition is breached, the insurer may refuse to pay a claim in case an unfortunate event occurs. Also, some policies offer cover for the boat trailer but this might not be so common.

There are also specific exclusions which apply under this section, the most common being:

• Wear and Tear, and corrosion;
• Loss of value because of age, use, or following repair;
• Depreciation and deterioration;
• Loss of, or damage to motors and electrical machinery caused by frost, latent defects, or by mechanical and electrical failure; and
• Scratching, denting or bruising arising whilst the insured craft is in transit.

Liability Cover

Under this section, the insured is reimbursed with the amount that he/she was legally liable to pay to third parties as a result of accidents arising out of the use of the insured craft. Certain insurers may also offer, under their liability section cover, an ‘additional benefit’ for legal costs. These would cover the costs incurred in settling or defending a claim (some insurance policies may only cover legal costs if the claim is pursued in Malta. Hence, any legal costs for claims which may be pursued outside Malta would not be covered). Accidents which are commonly covered under this section include:

• Death or bodily injury sustained by swimmers or by other persons on board or getting on or off the craft;
• Damage to any other property including other vessels but also piers, docks, or wharves; and
• Removing or destroying wreck of the insured craft in case the insured fails to do so.

Cover may also be extended to include any person who may use the insured craft with the policyholder’s permission. However, such cover would exclude persons who are operating or employed by the operator of a shipyard, yacht club and marinas amongst others.

A number of exclusions are also applicable under this section, such as claims in respect of employees or in respect of property belonging to the insured, or in custody or control of the insured. Furthermore insurers will not consider claims for accidents whilst the craft is in transit by/attached to a mechanically propelled road vehicle.

Personal Accident Cover

Under this cover benefits are paid up to a specified limit following accidents whilst embarking, disembarking or whilst on board the vessel. Either a lump sum or weekly benefits will be paid in respect of any of the following events occurring:

• Death;
• Loss of one or both limbs;
• Loss of sight in one or both eyes;
• Permanent total disablement.

Such cover is subject to conditions, one of the most common being death or disablement occurring within one year of the injury being sustained. Otherwise, benefit will not be paid. There is also an applicable age limit, but this may vary from one company to another.

Policies also dictate situations where the insurer might refuse to pay a claim. Amongst these exclusions, there is death or disablement following a suicide, or when the person was under the influence of alcohol and drugs.

In addition, the insurer will also pay up to a certain specified limit for medical expenses, which may be incurred by the insured when seeking emergency medical treatment following an accident involving the insured craft.

General Information

• Some policies distinguish between what is referred to as the In Commission period and the Laid Up period.
• The In Commission period is the period when the craft is not required to be laid up and may be used in navigation for the purpose stated on the schedule subject to any restrictions. The insurance will be in force whilst the craft is on land and on water and whilst being lifted into or out of the water but not during any major refit or repair.
• The Laid up period (which must also be noted on the policy schedule) is when the craft cannot be used for any purpose except for dismantling, preparing for fitting out or customary overhauling and servicing. The craft must be laid up at the place noted specifically on the policy schedule. A specific agreement must be in place to include any undergoing major repairs or alterations during this period.
• A general condition normally found in a yacht and pleasure craft policy is the sea worthiness condition. The insured is required to take all reasonable precautions to maintain the vessel in a sea worthy condition at all times so as to prevent any loss of or damage and to avoid causing liability or injury to third parties. In addition, being sea worthy also means that adequate life safety equipment is available on board the craft. Failure to do so may lead an insurer to refuse to honour a claim. Some insurance policies may also require that bottled gas installations on-board an insured craft is kept in conformity with safety standards. In addition, policies are also likely to include a requirement on the policyholder to ensure that the craft is protected against bad weather by means of waterproof cover. Failure to comply with such conditions may also lead an insurer to refuse to honour a claim.
• The contract clause is a common provision in all yacht and pleasure craft policies. This states that the insured is required to identify the law applicable to the insurance policy. In the absence of such agreement, Maltese law would apply. This means that any disputes relating to the policy would be governed by Maltese law.
• In several policies one might find a jurisdiction clause which is pertinent to the liability section and which limits the cover solely to certain judgements; typically those delivered by Maltese courts only.
• Crafts with a 30hp engine require that the driver is in possession of a nautical licence. An individual will be able to take out a Yacht and Pleasure Craft insurance if he/she is 25 years old, and in possession of the necessary licence. However, the age requirement might vary between insurers.
• If an insured craft is sold, the insurance contract is not likely to cover the new owners. It is best to check the correct procedure if you wish to stop cover in such situations. For some policies, if the craft is sold after the first year, and there are no outstanding claims, the insured may be entitled to a partial return of the premium. Refund of premium may not necessarily be pro-rated and some companies may deduct an administrative fee. Some insurers may offer a “No Claims Discount”.
• What should be taken into consideration when calculating the sum insured:
  • Hull and Machinery including inboard machinery and factory fitting equipment;
  • Special Equipment (comprising of electronic communication/navigation or entertainment equipment that do not form part of the integral fittings and which may be purchased separately and removed from the vessel whilst not in use);
  • Tender / dinghy;
  • Outboard motors;
  • Road trailer / trolley; and
  • Personal effects;
• Subject to additional premium, cover may also be extended when the insured craft is being navigated beyond Maltese waters. In this respect, there are two options which could be available - Maltese and Italian Waters, or else Mediterranean Waters West of 25, 30 or 34 degrees east, but this depends on the insurance provider. When navigating in Italian waters, a compulsory Italian Insurance Certificate is required. It is important for the insured to note that higher third party limits of indemnity are required for crafts navigated in Italian Waters.

We sometimes tend to get carried away with all the arrangements for a much expected break and leave the most important things (such as travel insurance) to the last minute. Nothing can mess up your holiday faster than lost luggage or an unexpected accident. Having travel insurance won’t prevent things from going wrong, but it can make things much easier if you get in trouble.

A Policy Worth Having

Do I need insurance for travelling?

Spending a bit of extra time to purchase your travel insurance policy might save you a lot of money and some nasty surprises. Suffering an injury in a foreign country or losing your baggage when you go on holiday could completely disrupt your plans and ruin a long awaited break. Shop around to find a policy that suits you and the type of holiday you are planning.

Never go for the cheapest travel insurance but choose that policy which satisfies your travel plans. Check the sum assured you will need to cover any equipment (such as an expensive camera) or valuables you might be taking with you; otherwise you will risk being under-insured. If this happens, any settlement made by the insurance company for a claim will be based on the insurance coverage relative to the replacement cost of the item.

As a cardholder, one may benefit from a travel and purchase protection insurance at no additional cost. It would be wise to download a copy of the policy document from the card issuer’s website before your travels. Check the benefits and conditions of your policies.

A travel insurance policy will usually cover events such as the costs of medical care following personal injury and loss or theft of your possessions, as well as costs that you incur if your travel plans are disrupted. However, no travel insurance policy will cover you for everything that might happen on your holiday. It is therefore just as important to know what’s not covered by a policy, that is “the exclusions”, as it is to know what is covered.

Not all travel insurance policies are the same.

Some policies include 24-hour medical assistance, a help line and private hospital cover, although be careful of “special circumstances” which can apply. Other policies target younger travellers and will cover a broader range of adventure-type activities. Above all, not all policies have the same level of cover.

Shop around to find a policy that suits you and the type of holiday you are planning and never go for the cheapest policy. Ask any questions which you consider necessary to understand the policy.

Making a Claim

What should I do if something happens during my trip?

As the travel insurance brochures will tell you, accidents can happen. And if they happen on your holiday, then you need to know what you are expected to do under your travel insurance policy. Otherwise you risk a claim being denied in part or in full by the insurer.

Here is some information you should keep in mind about making a claim:

1. Check your policy to see if the relevant section for your loss is subject to an excess and check what the excess is. If you have losses under different sections check them all.
2. If you are filing a claim for cancellation of a trip and have had to obtain a VISA, you can still claim the reimbursement of the fee you paid to obtain the VISA. On the other hand, if the VISA is valid for a number of months or years and can be used for future trips, the right to claim reimbursement of this fee is invalidated.
3. You are required to report any losses or thefts to Police authorities in order for a claim to be paid. If the loss or theft occurred in a particular place such as your hotel you will also need to report it to the hotel management. This should be done within 24 hours of your discovering the loss. Keep a copy of the police report to present it to your insurers when you return. You also need to check any deadlines for making a claim with the insurer.
4. If your baggage is lost or gets damaged during the journey, report it at the airline desk before you leave the airport. You will receive a “Property Irregularity Report”. You will need to present this to insurers. Then write to the airline and tell them of your loss within seven days. This applies to any other form of travel i.e. by sea, train etc. Insurers will not be able to meet your claim if you don’t submit a “Property Irregularity Report” for baggage lost or damaged in transit.
5. You need to keep the receipts of any expenses that you incur because of an insured event that you might claim on your return. These could include the cost of replacing essential personal effects when your baggage is lost for more than twelve hours or receipts for the purchase of foreign currency. Remember insurers will require you to substantiate the size of your claim.
6. You should not admit or deny liability for any loss or try to negotiate any amounts.
7. When travelling, carry with you details of the emergency assistance offered by your insurer. ALWAYS take a copy of the policy with you on holiday so that you know what to do if something goes wrong.

Remember: Even though you might have purchased your insurance policy from your travel agent, you must make any claims to the insurance company

Before You Buy a Policy

What should I keep in mind when purchasing travel insurance?

What should I keep in mind when purchasing travel insurance?

• The purpose for which you are travelling. Are you going on holiday or is it a business trip? Does your holiday involve activities such as rock-climbing or sporting activities such as skiing? This is all information which you must disclose in order to be able to ensure that you are covered for any possible losses or injuries you might suffer in participating in such activities. You might be required to pay a higher premium in such instances. If you are attending a particular event as part of a group such as a sport tournament, it might be best to organise a group policy specifically for the event.
• The kind of medical treatment to which you will be entitled if you suffer an injury or illness whilst travelling. Remember to ask about emergency and rescue services particularly if you intend to visit remote areas and whether there are any thresholds to refunds. Think of the least expected possibility such as a toothache! Remember that there is no cover for treatment of any pre-existing medical condition such as any chronic illness like asthma or diabetes. Enquire what happens if you have to stay longer or less than your intended holiday period due to illness.
• You will be required to sign a health warranty stating that you are not suffering from any serious or chronic illness or receiving or awaiting to start medical treatment for any condition. Read it well before signing. Any misrepresentation or failure to disclose any condition will render your insurance void.
• Ask what costs are covered in the unfortunate event of death. Enquire what cover you have for repatriation and burial costs.
• Whether you will need cover for valuables. This term includes items such as jewellery, watches, photographic equipment and sports equipment amongst others. Assess whether you will need to take such items with you and make sure the limit on your insurance policy is enough. There may be a limit for each item and a maximum limit. So take the time to check the value of the items you and any other travelling companions will be carrying. Remember you must keep these items in your hand-luggage and not in an unaccompanied suitcase whilst travelling. Most travel policies define what is considered as valuable item.
• Check on the possibility of covering cash and travellers cheques. Some policies do not give this cover when travelling in certain territories. Remember you will be expected to take good care of your cash while travelling and it is always advisable to keep the cash level to a minimum. Check what rates of exchange will be used in the event of a loss.
• Make sure you understand the cancellation and curtailment cover given under the travel policy. The policy will list specific circumstances which may cause you to cancel or curtail your journey and which are covered. Only in these instances will the policy refund you any non-refundable deposits you had paid in advance. Remember the cover under this section will start from the date you purchase the travel policy and that it is therefore important to take out the insurance policy as soon as you pay any deposit to the travel agent/airline/hotel.
• Enquire what excesses apply to the different sections of your policy. If you have two unrelated claims, two different excesses may apply.
• Are you adequately covered? Ask your insurer to guide you select appropriate cover for the value of your property – the amount insured. Many insurance policies would normally include a condition in your policy (usually under personal belongings) whereby if at the time of any loss or damage your amount insured is inadequate, the amount you may recover will be a proportion of the amount insured to the value of your property at the time of the loss or damage. This means that if you claim for more than you are insured, you are most likely to get a lower amount by way of proportion.

So don’t organise all your travelling arrangements and leave the insurance as an afterthought!

Medical Cover Abroad

What is the emergency number you should dial if you require medical assistance while abroad?

It is imperative that you take a copy of the policy document with you and keep it handy at all times and look out for the emergency number you are to dial in case you need international medical service. It might be the case that the insurance won’t cover you for the medical expenses incurred unless such medical services are contacted immediately upon you needing hospitalisation (or if the condition is serious, soon after hospitalisation) and before repatriation to Malta.

Last but not least, always take with you the European Health Insurance Card (or EHIC) independently of the purpose of your trip. This allows anyone who is insured or covered by a statutory social security scheme of the EEA (any member state of the European Union, Iceland, Norway, Liechtenstein and Switzerland) to receive medical treatment in another member state for free or at a reduced cost, if that treatment becomes necessary during their visit (for example, due to illness or an accident), or if they have a chronic pre-existing condition (for example, in cases of asthma, diabetes, or cancer) which requires care. However, it is important to note that the card does not cover your health care costs while abroad if you are travelling in order to obtain treatment for an illness or injury that you had before travelling. Nor does the card cover you for private sector health care provider. Access http://ehealth.gov.mt for more information about the benefits of EHIC and the terms applicable for the use of this card in public medical facilities.

Do I still need a travel insurance policy if I have a European health insurance Card?

The European Health Insurance Card (EHIC) is complementary to the private insurance but does not replace it. It will never cover the cost of bringing you back to Malta in the event of serious illness, accident or death. Even with an EHIC you may still be faced with large bills to cover your share of the costs in some countries. Therefore a travel insurance policy is highly recommended.

Exclusions and Cancellations

What is excluded in a travel insurance policy?

What is excluded in a travel insurance policy?

Carefully check all the exclusions before you decide on a travel insurance policy. They should be clearly identified in the policy document.  In many travel policies loss or damages suffered in the following circumstances are often excluded:

• You have a pre-existing medical condition which is not advised to the insurer or you travel against medical advice. This exclusion may also apply for any members of your household or any persons with whom you intend to travel or stay.
• You join in “adventure”, “danger sports” or other hazardous activities. “Adventure” activities often include bungee jumping, white water rafting, ballooning, snow skiing and scuba diving.
• You leave your luggage “unattended” in a “public place” and it is lost or stolen.
• Your valuable items such as cameras, sound equipment or mobiles are lost or stolen when left “unattended” in a motor vehicle or put in unaccompanied baggage.
• You exceed the age limit. Some insurance companies will not insure you if you are over a certain age.
• You cancel plans because of a change in your financial circumstances or business obligations

When is cancellation covered under your policy?

Make sure to check what coverage you have under the policy before you actually sign (unless this is offered as an added benefit to a specific debit or credit card). Pay particular attention to when cancellation under your policy is covered and when this is excluded. Don’t assume that your policy covers you for any eventuality that leads to cancellation of your trip. Below we describe typical cancellation scenarios that are covered or excluded under a travel insurance policy.

What may be covered:

• Accidental bodily injury to or illness or death of the insured person, any immediate relative, close business colleague or any person with whom the insured person has arranged to travel;
• You or your travelling companion being summoned for jury service or called as a witness in a Court of Law during the period of insurance;
• Your home becomes uninhabitable following a fire, storm or flood.

What may be excluded:

• Withdrawal from service temporarily or permanently of any ship or aircraft on the orders or recommendations of any port authority or the civil aviation authority or any similar body in any country;
• Pre-existing medical condition or travelling against medical advice;
• The insured person or travelling companion is not inclined to travel, suffering from anxiety or are in financial difficulty.

Some policies may offer additional cover for cancellation as a result of adverse weather conditions. Check with your insurer about such cover and the applicable limits and conditions. Always keep an eye for specific exclusions under a travel insurance policy, such as one-way journeys, winter and extreme sports (unless the last two exclusions are specifically catered for under the policy). Other common exclusions are unattended personal effects (such as luggage), valuables and money.

If luggage is lost or damaged while in the care of a transport company, authority or hotel you must immediately write to them and give details of the loss or damage. If the luggage is lost or damaged by an airline you must obtain a property irregularity report from the airline desk and keep the damaged items, travel tickets and tags as you will need these to file a claim under your travel policy. Insurance companies may also require a written police report when personal belongings are lost or stolen and normally this has to be obtained within 24 hours of discovering the loss. The insured person must provide the insurer, at his/her own expense, with all the detailed particulars and evidence relating to the cause and the amount of the loss, damage or expense.

The extension of cover will depend on the type of policy chosen; the one with the lesser cover (basic policy) will obviously be the less expensive. Insurance companies will usually not make good for the whole amount of the claim and the policy holder will have to bear a part of the cost of a claim himself. This is known as the excess. The amount of excess will vary between insurance companies and even between insurance policies, with the basic policy usually having the highest excess.

There are time limits during which a travel insurance policy will be considered as valid. The period of insurance under the cancellation section starts from the date the schedule is issued and ends when you begin your holiday or journey. The period of insurance for all other sections starts when you leave your home or workplace and ends when you return home from your holiday or journey. Cover applies for the number of days shown on the schedule (which might vary from 3 to 6 months)

What items from my business should I include under my insurance?

The most important and costly items in a business are the fixed assets. These make up the main bulk of invested capital in the business and a loan might have been taken out in order to procure them. Thus, it is even more important to have insurance in place! Fixed assets which can be covered under a business insurance policy include:

• Buildings, including anything permanently affixed to the buildings such as utilities, false ceilings etc…). Although glass may be included with buildings, it might be insured separately on an All Risks basis.
• Furniture, fittings and other general contents such as work bench, shelving and furnishings.
• Machinery and Trade equipment such as cash registers, weighing scales, refrigeration equipment and point of sales equipment. Items of an electronic nature might be insured under an Electronic Equipment or Business All Risks Policy.
• The Stock in Trade value should reflect the maximum stored on the premises at any one time and insurers may cover stock whilst stored in multiple premises on a floating basis (the insurance would cover all your stock stored in different locations without requiring to give the exact amount found in each separate location). Stock might also include elements of raw material and work in progress for some business such as woodworkers and other manufacturers.

What types of risks would normally be covered by a commercial property insurance policy?

A typical commercial insurance policy is based on risks which would be covered should these occur (called Fire, Special Perils & Theft Policy). This is very similar to the risks covered under a typical home policy. The following is a non-exhaustive list of risks typically covered by a commercial insurance policy:

• Fire, explosion and lightning
• Damage by Aircraft and other aerial devices such as space debris
• Impact with the property insured by road vehicles or animals not belonging to you
• Earthquake and volcanic eruption.
• Riot, strikes and civil commotion
• Malicious damage
• Storm, tempest and flood
• Bursting or overflowing of water tanks and pipes
• Falling trees or branches
• Theft or attempted theft involving forcible and/or violent entry and/or exit
• Hold-up by violence and/or threats of violence

The other type of cover is called All Risks which is similar to that available under a private home policy. If you purchase an All Risks policy, you should expect to be covered for all risks except for any exclusion which should be listed in your policy. Exclusions may vary between different policies. However, typical exclusions such as wear and tear, consequential loss and certain types of property can be found under all business policies. It is important to check the wording of your policy and ask your insurer if there is an exclusion which is not compatible with your business.

How do I calculate the sum insured?

The premium you pay for your policy is based on the sum insured.

When calculating the sum insured you should always exclude the amount of VAT, as long as you would be able to reclaim it from the VAT department. If, on the other hand, you can’t reclaim VAT, the sums insured should include the VAT element. For buildings, the sum insured must include any services and permanent fixtures and the amount must reflect the rebuilding cost ( the amount of money required to rebuild the building including permanent fixtures and fittings such as tiling and soffit etc….)

As to the trade equipment, machinery and other contents, if your policy is on an indemnity basis you need to calculate the sum insured of the item considering wear and tear. If the policy is on a reinstatement basis, the sum insured needs to be calculated on the replacement cost at the time of loss.

For stock, the sum insured needs to be the replacement at cost price and should amount to the maximum value at any one time.

Remember that it is your duty to keep the sums insured up to date. In addition, make sure you inform your insurer if there are any changes in your business.

How can I cover the profit of my business?

Following serious damage to the premises or contents, the subsequent interruption of the business may result in lost production and sales on top of unsatisfied customers. Insurers have devised a cover (often referred to as Business Interruption Insurance or Consequential Loss) which can be included under your business insurance portfolio so that if the loss causing the damage is covered under the property damage section (that section covering your buildings and contents against fire, storm etc…) this policy will cover any subsequent loss in profits of the business.

For this policy to operate, you will need to select the period during which the damaged caused is repaired and business is back to normal. This period, usually called indemnity period, might be anything starting from usually one month to the most common 12 months. Insures may accept longer period subject to underwriting. It is ideal to establish the total loss and the time you would require to get permits, rebuild, get machinery, stock, employ people and get the business back on track.

What would be paid out in the event of a claim would be the profit for the period during which the business was not operating; therefore the premium is based on the gross profit of the preceding year. It is a condition of the policy to always have audited accounts available and which are required in the event of a claim. Such a policy would also cover increased costs meant to prevent or minimize a greater loss of profit such as renting alternative/temporary premises.

Normally, you will be required to have a policy covering your buildings (to make sure there are funds available to reconstruct and obtain funds to replace any damaged machinery and equipment) in order to take out a Business Interruption policy.

What would be my position if a third party is injured or his/her property damaged following an accident caused through my business?

Either as a sole trader or as a registered company you are legally liable at law for third party bodily injury or property damages arising from your business premises. A Public Liability policy will cover you in the event that one of your customers is injured on your premises or any nearby premises are damaged as a result of an accident that is caused through your negligence or omission.

Such an event must be caused through your negligence or omission (by accident) and liability together with the amount of compensation might be determined by a court of law. Any legal fees would also be covered under the policy subject to confirmation of the insurer. The amount an insurer will pay under such policy is subject to a limit which is chosen at inception and may be increased should this not be adequate for your business needs.

If you are a restaurant, bar or a business which provide food or beverages, cover may be extended toward liability arising from such products. The same policy may be extended to cover liability arising from trades such as hairdressers.

Delivering goods to your client’s premises or working away from your premises may be part of your business for which liability cover may also be required. Always ask your insurer for any available extensions specific to your business needs.

What cover is available for my employees?

As an employer, you bear certain responsibilities to provide a safe working environment to your employees. Such obligations arise under the Occupational Health and Safety Authority Act and any regulations issued thereunder. If you fail such obligations you may, as an employer, be liable at law for the effects of an illness or injury suffered by your employees.

Although not compulsory, an Employers’ Liability policy is very important for a business since injury or death claims may run into thousands of euro and could have a potentially negative effect on your business.

This type of policy would pay claims should you (the employer) be found responsible of injury sustained by any of your employees through an accident in the course of their duty.

The injury has to be a result of a negligent act or omission from your end.

The estimated annual payroll and estimated number of employees for the subsequent year will be required in order to purchase this policy. Since the premium would be calculated on estimates, the insurer will require that at renewal, the actual figures are provided and a return or additional premium may be due. Similar to a Public Liability Policy, this cover is subject to a limit which is chosen at inception but may be amended any time during the policy’s lifetime.

Employers’ Liability policies may also be extended to cover statutory liabilities to pay injury leave benefit under a so called EIRA (Employment and Industrial relations Act) extension.

Would cash and cheques be covered along with my contents?

Money, which includes cash, cheques, stamps and other similar items (always check with your insurer for definition) is best covered separately under an appropriate Money Policy. This type of policy would usually cover money held:

• in the business premises of the insured during or after business hours in the cash till or in safe;
• in transit (to the bank or private residence);
• in bank night safes until removed by a bank official;
• in the private residences of the Insured or any authorized employee of the insured

Different limits will apply to the different situations mentioned above. You need to provide proof of actual loss of money, e.g. by means of Z-readings from your cash register.

A common extension under a Money Policy is the personal accident assault cover which would cover an individual for a fixed amount if he/she is injured or killed during a holdup.

Will my stock be covered if it is damages whilst in transit in one of my vehicles?

Motor insurance offers no cover for your business stock if the vehicle is involved in a road traffic accident. If, as part of your business, you deliver items between premises or to your customer’s premises, a Goods in Transit policy is required to cover such and other contingencies.

This type of policy would cover you against destruction or damage to property whilst in transit in any vehicle anywhere in Malta until delivery at its final destination including loading and unloading from any vehicle.

How can I cover any stock against deterioration should my refrigeration equipment be damaged?

A Deterioration of Stock policy would cover stock kept in freezers and refrigerators against destruction or damage caused by a change in temperature as a result of a number of causes.

Although cover may vary between insurers, it usually includes: breakdown of the plant, accidental failure of the public electricity supply and accidental damage to plant. Insurers might not grant cover if plant used is old, usually over ten years.

This policy might require that a Machinery Breakdown Policy is in force at all times and that all equipment is serviced by a professional technician at least once a year. Insurers may also ask for an inspection certificate at renewal.

Is there additional cover for machinery?

In addition to the cover provided under business contents policies, a specialised Machinery Breakdown  policy offers cover against the breakdown of a number of different types of machinery and plant. Cover applies for when the machines are in use, switched off or whilst being dismantled for the purpose of cleaning or overhauling.

Cover under this type of policy is very wide and is defined as sudden and unforeseen loss or damage. Exclusions for this cover include wear and tear, damage covered by warranty and any damage which is caused through manufacturer’s error. Like the deterioration of stock cover, this policy may require that a yearly inspection is carried out by a qualified professional.

Is there a more specific cover if I want to cover glass separately (from the standard buildings cover)?

Due to its particular nature, glass might be at a high risk of breakage and might be quite expensive to replace especially if the business is a showroom or most of the building is made of glass. For buildings, cover on a named perils basis might be sufficient but might not be adequate for glass.

Glass might include display windows including frames, shops signs and sanitary wear and under such policy would be covered on an all risks basis. Cover under a Glass Policy also includes damage to door or window frames and the cost of shoring and propping damaged areas. Scratching, denting, cracking, wear and tear or other deterioration are the major exclusions under this type of policy.

How can I cover computers, printers and other electronic equipment found in my business?

No business can nowadays do without electronic equipment and the business might even stop functioning should any of this equipment be out of order! Although such equipment can be normally covered under the contents policy, insurers have developed a specialized type of cover often referred to as an Electronic Equipment Insurance (EEI) which would include:

• Accidental damage including breakdown and losses due to lightning and electrical power fluctuations or surges,
• Loss of data stored on computers,
• additional expenses incurred following damage to the property insured, and
• Portable equipment may also be covered whilst away from the premises and even when abroad

Items which may be included under this type of policy include computers, printers, servers, photocopiers, laptops, point of sale systems, PABX systems and any other business equipment which is used in the business. A similar policy is the Business All Risks, which however might not cover loss of data and expenses incurred as a result of the damage.

Do the policies mentioned above need to be taken all or is there a policy which includes everything in one document?

No, you can choose only that cover which you deem necessary for your business. You may mix and match accordingly, subject to underwriting conditions (i.e. your insurer would need to agree on the mix of policies you select).

For example, insurers may require that, if you would like to have a policy which covers you for Deterioration of Stock, a Machinery Breakdown is also in force to ensure that there are the funds available to pay for the damaged machinery. The same applies for a business interruption policy which requires the buildings and other property to be covered under a property policy either on a perils or All Risks basis.

For the convenience of small and medium enterprises, insurers have devised “package policies” which would basically include all the cover mentioned above under one policy. Excess, terms and conditions would apply to each individual section and would allow you to have one policy document and renewal date. These package policies may be marketed under various names.

Are there other policies particular to my business?

Other classes of insurance offer cover which are particular to businesses. These might include:

• Commercial Motor Insurancepolicies are designed to suit the needs of the business customers and would include certain extensions particular to the risk involved.
• If you employ other people in your business you might include a Group Health policy as a benefit to your employees. The policy would offer the same individual health cover but at a rate reflecting the loss of your group.
• A Group Personal Accident, similar to the individual personal accident policy, provides benefit should you or any of your employees be injured, or die, either whilst working, or during all day (depending on the cover). The amounts paid may either be based on the wages or a fixed benefit.

Home insurance helps protect your property…and may also cover the things you value in your home.

We often use the terms ‘home insurance’ or ‘household insurance’ in a general way to refer to insurance that covers both home and belongings.  However, most of the time, insurance cover for buildings is separate from the insurance cover for the actual contents of the building and it should not be taken for granted that a building policy automatically covers the contents as well.

Typically, home insurance policies are split into separate sections – ‘buildings’ and ‘contents’ – and therefore you may not necessarily be covered under both sections. However, this does not mean that you must buy both types of insurance cover from the same provider. It is also possible to buy a ‘contents only’ or a ‘buildings-only’ policy. You are encouraged to inform your insurer of any material changes to your contents or buildings, including the sums insured.

Buildings Insurance

Buildings insurance covers the structure of the building, plus permanent ‘fixtures and fittings’ such as baths, fitted kitchens, windows and doors, etc. The buildings insurance type of policy is typically required by banks when purchasing a property and it will be no longer in force once the loan is repaid.

If you are unsure about whether something is covered under your buildings insurance policy, you need to check whether an item can be reasonably removed and taken to another residential property.

 

Contents Insurance

Household items that can be moved from one property to another will not generally be covered by a 'buildings' policy, but will need to be covered under a ‘contents’ policy. Contents insurance usually covers any items which can be taken from one residential property to another, for example, furniture, TV sets, rugs and carpets, paintings, jewellery, etc.

While it is generally easy to determine whether an item is part of the buildings or part of the contents, in some cases, this is not immediately apparent.

 

You are encouraged to ask your policy provider for information regarding the different policies available and the coverage offered under each policy. Having all the necessary information will help you choose the insurance cover which best suits your needs.

 

What is home insurance?

Home insurance provides coverage in the case of loss or damage to your property and/or the contents of your home as well as liability for injuries and damage you cause to third parties arising from your home ownership or personal liability.

Can I own a home without a home owners' insurance?

You can legally own a home without a home insurance. But, if you buy your home and finance the purchase with a home loan, your lender will most likely require you to get home insurance cover. The reason for this mandatory requirement is that lenders need to protect their investment in your home in case it burns down or is badly damaged by a disaster.

After your home loan is paid off, no one will force you to buy home insurance. But it does not make sense to cancel your policy and risk losing what you have invested in your home.

Which are the types of home insurance?

A home insurance can be:

• A Building Insurance covers you for damage to buildings;
• A Contents Insurance covers you for the loss of or damage to the contents of your home;
• Personal accident/liability insurance to cover the policy holder and the household;
• “All Risks” Insurance covers you for loss to, or damage to, your personal possessions.

Other options are also offered: if you are interested ask your insurer or insurance intermediary about them.

You may choose to insure the buildings only or the contents only or both. You may also choose to buy further optional covers available as shown above. These often vary from one insurer to another.

What are the perils or events insured against under a Home Policy?

Normally, the policy would cover any loss or damage caused by:

• Fire
• Smoke
• Explosion
• Lightning
• Earthquake
• Theft
• Storm
• Flood
• Subsidence
• Cost of replacing locks and keys
• Falling trees
• Breakage or collapse of aerials
• Riots, Strikes, Political disturbances
• Malicious damage and vandalism
• Escape of water from burst pipes or tanks
• Leaking oil from heating systems
• Impact by aircraft, vehicles or animals

Check your insurance policy for the “perils” or “risks” covered as these may vary slightly from one insurer to another.

There is no such thing as “Act of God” in an insurance policy. The risks for which you are covered are clearly listed in your policy. Any risk which is not mentioned or listed is excluded and therefore your policy does not cover you. 

There are various additional covers under both buildings and contents cover. Check these with your insurer as they may vary.

The cover for certain risks such as theft or water damage is suspended if the building is left unoccupied for more than a specified period of time. Ask your insurer for exact details. Better still, refer to your policy.

What is the meaning of 'Sum Insured' in a home policy?

The sum insured is the total amount of money for which you are covered. It is the maximum amount your insurers will pay for all the claims arising out of one occurrence such as a fire or an explosion. It is very important that this sum is sufficient because if you are under-insured, claim payments will be reduced by applying what insurers call average. Your claim will be reduced proportionately. Therefore if the Sum Insured is only 80% of the total cost, you will only be paid 80% of the claim. You will have to bear the balance of the loss yourself.

How do I calculate the value that I should insure my home for?

Reassessing the sum insured can be very daunting especially in the case of large properties. Under the “buildings” section, you are insuring the actual structure of your home and this includes garages, any outbuildings, greenhouses, patios, terraces, swimming pools, driveways, walls, gates and hedges. It also includes fixtures and fittings which are all those things you would not take with you if you moved, such as bathrooms, doors, windows, tiling, air conditioners and generally speaking kitchens, although these may sometimes be included with contents.

Therefore, in calculating the value, you must cover the cost of rebuilding your home at current construction costs. The value of the land must not be included and you should not take the price you paid for your home or the current market value you expect if you were to sell it. Don’t forget to add an extra amount to cover demolition costs, architects and surveyor’s fees.

Under the “contents” section, you are insuring all the items in your home such as furniture, household appliances, carpets, linen, radios, videos, hi-fi equipment, cameras, home computers, sports equipment, cameras, jewellery, furs, clothing, personal money and other valuables. You can even extend to insure food in your freezer.

There are specific items that cannot be included, such as, amongst others, motor vehicles, boats, trees, bushes and plants, property used for business purposes. The policy will list these items. Check it carefully.

This contents section is generally covered by insurers on a New for Old basis and you must therefore calculate a Sum Insured that will provide you with enough money in the event of loss or damage to replace all the contents of your home as new. The insurer will pay you the full cost of repairing damaged articles or the cost of replacing them with equivalent new articles if they are stolen or destroyed.

If the cover is on an indemnity basis a deduction will be made from your claim payment to account for wear, tear and depreciation.

Certain items under the contents, such as works of art, jewellery or other valuables, may be subject to a limit. This is usually expressed as a proportion or percentage of the total Sum Insured under household contents. You may find these limits too low for your particular needs and your insurer may agree to raise the normal limits. In certain instances you will be required to get the item appraised and to present the valuation to the insurer.

Always read your policy carefully and look for the section about Claims Settlement Basis. Enquire what happens if you do not wish to rebuild the property or to replace any particular item as practices may vary between one insurer and another. 

Remember that the buildings, contents and certain other sections of the home policy may be subject to an excess which is the part of the loss you will pay yourself. Make sure you know what excesses apply.

How do I take a home inventory, and why?

Would you be able to remember all the possessions you have accumulated over the years if they were destroyed by a fire? Having an up-to-date home inventory will help you get your insurance claim settled faster and help you purchase the correct amount of insurance.

Go through your home, from room to room and make a list of your possessions, describing each item and noting where you bought it and its make and model. Clip to your list any sales receipts, purchase contracts, and appraisals you have. For clothing, count the items you own by category - trousers, shirts, coats, shoes, for example - making notes about those that are especially valuable. For major appliances and electronic equipment, record their serial numbers usually found on the back or bottom.

Ask your insurer or intermediary to provide you with a chart that you can use to establish the right amount to insure.

Do not be put off!

If you are just setting up a household, starting an inventory list can be relatively simple. However, if you have been living in the same house for many years the task of creating a list can be daunting. Still, it’s better to have an incomplete inventory than nothing at all. Start with recent purchases and then try to remember what you can about older possessions. Here are some suggestions:

• Valuable items

Valuable items like jewellery, art work and collectibles may have increased in value since you purchased them. Check with your agent to make sure that you have adequate insurance for these items. They may need to be insured separately.

• Take a picture

Besides the list, you can take pictures of rooms and of important individual items. On the back of the photos, note what is shown and where you bought it or the make. Do not forget things that are in closets or drawers.

• Use a personal computer

Use your PC to make your inventory list. Remember to keep a back-up of the information you have stored on your PC.

• Storing the list, photos and back-up e-storage

Regardless of how you do it, keep your inventory along with receipts in your safe deposit box or at a friend’s or relative’s home. That way you’ll be sure to have something to give your insurance representative if your home is damaged. When you make a significant purchase, add the information to your inventory while the details are fresh in your mind.

What is covered under the Third Party Liability section of my Home Insurance?

This section covers you and your family members against legal liabilities, as an owner, tenant or occupier of a home, that arise if an accident causes bodily injury or property damage to a third party. This cover applies in and around your home and is subject to a limit.

The buildings section covers your liability as the owner of your home whereas the contents section covers you as the occupier of your home.

What does the option of 'All Risks' cover for Personal Possessions offer me?

An “All Risks” cover protects you against loss or theft of or an accidental damage to your personal valuables both inside and outside your home. Some insurers may extend cover to other countries as well.

Personal possessions that may be insured in this manner include photographic equipment, musical equipment, sports equipment, watches, jewellery, paintings, stamp or coin collections, etc. Look for the definition of personal possessions in the policy to help guide you.

In the case of an “all-risks” policy you can choose which items you want covered and their value. An All Risks cover is cover against accidental damage. Therefore a painting would be covered under your basic contents cover if it is damaged or destroyed by a fire or a flood or any other peril listed in the policy. However under the All Risks the painting will also be covered if it is accidentally damaged, say by spilling something over it. The cover will be subject to a list of exclusions. Check the exclusion list under this section to make sure you understand what is covered.

The items insured under this section above a certain value will be identified on your policy schedule together with the sum insured for each item.

What does the Personal Accident cover option offer me?

This cover provides you with benefits if you suffer an accident anywhere in Malta. The policy will normally pay:

A lump sum if the accident leads to:

• Death
• Permanent total/partial disablement

Or weekly benefits if the accident leads to:

• Temporary disablement

In addition there will be a sum to cover medical expenses following an accident. These benefits will supplement the National Insurance benefits you receive, which are subject to limitations.

Additional living expenses after a disaster

This is a very important feature of a standard homeowners insurance policy. This pays the additional costs of temporarily living away from your home if you cannot live in it due to a fire or other insured disaster. It covers the costs of a reasonable alternative accommodation while your home is being rebuilt.

Coverage for additional living expenses differs from company to company. Many policies provide coverage for about 10% of the insurance on your building.

You should talk to your insurance representative to make sure you know exactly how much coverage you have and how long the coverage will be in effect. In most cases, you can increase this coverage for an additional premium.

What can I do to get a discount on my home insurance premium?

Most insurers offer discounts for improved security by means of an intruder alarm. In addition they may offer a Senior Citizen's discount and discounts if you have any additional insurance covers with the same insurer.

How often should I review my policy?

There are four events that should trigger a review of your policy:

1)When your policy comes up for renewal - Do not just automatically send a cheque to your insurance company. Take the time to review your coverage and call your insurance representative with any questions or concerns that you may have regarding your homeowners insurance. Ask yourself the following questions:

• Has the company made any changes in coverage since last year?
• Does my policy now include a separate excess for particular risks?
• Should I raise the excess to save money?
• Am I taking advantage of all available discounts?
• Do I need to raise the amount of coverage for liability, personal possessions or the structure?
• Are there other policies on the market which offer cheaper rates – and perhaps offer a better deal?

2) Major purchases or alterations/improvements to your home - If you have made any major purchases, make sure that you have the proper coverage. And, do not forget about gifts. If you have received a diamond engagement ring or if a member of your family has bought you expensive artwork or a computer, talk to your insurance representative about increasing the amount of insurance cover you have for your personal possessions.If you have made major improvements to your home, such as adding a new room, or expanding a kitchen or bathroom, you risk being under-insured if you do not report the increase to your insurance representative. Do not forget about new structures outside of your home. If you have built a room on your roof for a washroom or as a tool-shed you need to speak to your insurance representative. Keep receipts and records in case you need to forward copies to your company.

3) You have made your home safer - If you have installed a fire/burglar alarm system or upgraded your plumbing or electrical system, make sure that your insurance representative knows about these improvements. You may qualify for a discount.

4) Major lifestyle changes - Marriage, separation, or adult children who leave your family home, can all affect your homeowners insurance. When people move in or move out, they take their belongings with them. And you may need additional coverage if there is a sizeable increase in the value of the belongings in your home.

What do I do if I have a claim?

• Contact your insurer as soon as possible. Do not delay as this may prejudice your position. Ask if a survey is required and when a surveyor will be sent. Ask for a claim form. When you receive the claim form complete it with full details and sign it. Submit it to your insurer and keep a copy.
• If you have a liability claim, advise insurers of any impending prosecution you are aware of. Do not negotiate, admit or deny liability with the third party.
• If you are the victim of a theft or your home has been vandalised report it to the police. Get a police report and the names of all law enforcement officers that you speak with. After the police have seen the premises, take reasonable steps to protect your property from further damage and make it as secure as possible. Keep copies of any receipts if costs are incurred for presentation to your insurers.
• If you have suffered water damage, try to minimise the loss or damage by removing the water, shutting off the water supply or start drying out the damaged items.
• Never throw away any damaged items or start repairs without referring to insurers.
• Prepare a list of lost or damaged articles. You are going to need to substantiate your loss. You should also consider photographing or videotaping the damage. Prepare a home inventory, make a copy for your professional surveyor or architect and supply him or her with copies of receipts from damaged items.
• If you need to relocate, keep your receipts. If your home is severely damaged and you need to find alternative accommodation while repairs are being made, keep records of all additional expenses incurred. Check the exact details of the amount of cover you have under this section.

Questions to Ask Your Insurer or Insurance Intermediary about Home Insurance

Home insurance cover can vary from one company to another, so it pays to obtain quotations before you buy. While this list isn’t meant to be exhaustive, it should start you off on the right track.

1. What risks/perils are in my home insurance policy? What is excluded from my home insurance policy?
2. Are there certain risks or potential hazards to my home for which I cannot buy insurance?
3. What things could happen to my property that will not be covered, unless I make special arrangements?
4. What are some items that might require additional insurance?
5. Am I covered for “walk-in theft” and/or “forcible and violent entry/exit"?
6. What is the excess? Give me the price of my home insurance coverage with some different excesses.
7. Am I entitled to any discounts and/or is there anything I can do to get a discount?
8. On what basis are claims going to be paid? Review the basis you used to calculate the sum insured and ask the intermediary for guidance.

Bonus questions:

• 1. What kind of liability coverage do I have and how much?
  2. I am renting out my home to third parties. Does my home insurance cover any damage that such third parties may cause? Will my home insurance protect me if they end up stealing my TV, stereo and bedroom furniture? Do I need special insurance?