asked the Minister for Industry and Commerce if he will investigate the fact that motor insurance companies quote premiums based on value and yet, when there is a full claim made, the insurance companies are allowed to assess the amount according to their value while accepting premium on declared value.
Ceisteanna—Questions Oral Answers. - Motor Insurance.
8.
It is the responsibility of the policy holder to decide the value for which his vehicle should be insured. In determining this value he should bear in mind that cars depreciate rapidly and that an insurance company will not compensate any policy holder for more than the loss he has suffered. At renewal date each year, therefore, the policy holder should review the value of his car in line with the rate of depreciation so that the sum insured represents the correct value. Reducing the value may also, of course, reduce the premium.
In the past, motor insurances policy holders did not realise that it was their business to have the value of their cars reduced. After three years or so if there was a crash the value was based on the price of a three year old car. Does the Minister agree that insurance companies are unfair to policy holders in not advising them that they should reduce their premiums as the car is now worth less?
It is the policy holder who specifies the value of his or her car at each renewal date. Obviously, if the car is over-valued a higher premium is paid. It is a principle in the industry that no one should be compensated for more than he or she has lost. This principle is widely operated and I do not have any statutory right to change it. It is up to each policy holder to assess the value of her car at renewal date to ensure that he or she is not paying too much and is not over-insured.