Motor insurance

It is a legal requirement in Ireland to have motor insurance if you want to drive your car in a public place and you must produce a current Certificate of Insurance to pay motor tax. Failure to have motor insurance when driving in Ireland is a very serious offence and drivers will incur fines, penalty points and may be disqualified from driving. (See 'Rules' below).

Motor insurance is about protecting other road users as opposed to the driver of the insured vehicle and it is not an optional extra. Insurance companies provide motor insurance and unlike road tax, there is no such thing as a "standard" rate.

Young drivers represent a high risk for insurers and the cost of motor insurance in this age group is considerably higher than for others both in Ireland and throughout the European Union (EU). There are a number of things young drivers can do to reduce the cost of motor insurance:

• Join a parent's insurance as a named driver as early as possible. This will enable you to establish a safety record, which is crucial when you want to apply for insurance in your own name. Some companies offer discounts to young people seeking insurance in their own name if they have been a named driver.
• Get a full licence as soon as possible. Having a full licence will reduce the cost of your insurance premium considerably. Savings vary, but it is possible for a young driver to save a vast amount (up to €900 or more) on the cost of his or her insurance premium simply by having a full driving licence.
• Choose a car with a relatively small engine, as less powerful cars are cheaper to insure.
• Drive carefully. The best way to reduce the cost of your motor insurance is to build up your no claims bonus.

Motor insurance and the Equal Status Act

(Section 5(2)(d)) of the Equal Status Act, 2000 allows differential treatment in relation to the calculation of insurance policies in Ireland. This means, that insurance companies are allowed to charge higher or lower rates for policies on the basis of your potential risk as a driver. Given that younger drivers in Ireland are statistically more likely to have accidents, this explains why there can be sizeable differences in insurance costs between younger and older drivers.

Types of motor insurance policy in Ireland

The most basic insurance is "third party" and this is the minimum required by law. However, third party is only one of three main categories.

• Comprehensive. This is the most expensive type of insurance on the market and covers you for almost every eventuality: any damage done to the vehicle regardless of how it was incurred; life/accident insurance; loss of personal belongings from the car; the cost of a hired car if the insured car is off the road as a result of an accident; windscreen breakage, etc. With more brand new cars on the road than ever before, there has been a notable rise in people taking out comprehensive insurance. A brand new car should be comprehensively insured.

• Third party, fire and theft. This is the most popular form of motor insurance in Ireland. It covers you for loss of the vehicle through fire or theft and for any loss as a result of attempted fire or theft. Damage to property is also covered. There are also optional extras available such as windscreen breakage.

• Third party. This is the minimum cover required by law, but it does have restrictions and limits, leaving you open to substantial loss in the event of an accident. If you are at fault, then only your passengers and the driver and passengers of the other vehicle will be compensated. This type of insurance provides no cover for damage sustained in an accident to your car or if your car is stolen or goes on fire.

An insurance company considers many things when calculating an insurance premium. Most premiums are based on basic third party cover with the cost of extras added on. The main thing that will determine the cost of your insurance is what you actually want to be covered for. The following are always taken into account:

Licence

Whether you are driving on a full or provisional licence makes a huge difference to the cost of your motor insurance premium. You can expect to pay hundreds of euro extra, if you only have a provisional licence.

Size and age of car

The engine capacity and age of the car play a large part in determining the cost of your premium. The older the car, the more difficult it can be to insure. Many insurance companies believe that the older a car is, the more accident-prone it becomes. A new car is more expensive to replace than an old car and will cost more to insure. Likewise, the more powerful the car you drive, the more it will cost to insure.

Age of the driver

The young and the old represent high-risk categories and pay more for insurance.

Value of the car

The value of a car is taken into account for third party, fire and theft and for comprehensive insurance. What you have the car insured for, however, is not always what the insurance company will pay out in the event of a claim. In the event of the car being a write-off, the insurance company will only pay out what it feels the car is worth, which, more often than not, is less than the car is actually insured for. There is very little to gain by over-insuring a car and, equally, you should not under-insure it either.

Experience

All insurance companies will ask if you have ever had insurance in your own name before. If not, they will ask if you have ever driven under someone else's insurance without incident. This will be taken into account when calculating a premium. Insurance becomes less expensive with experience and a clean driving record.

Profession and use

Some professions are considered to be more at risk than others and will have a loading put onto their premium. What the car will actually be used for is also taken into account. A standard policy covers the vehicle for social, domestic and pleasure purposes, but not for the carriage of goods. If the car is being used for business, then a loading will apply. If the car is being used commercially, then an even higher loading will be imposed.

Where the car is kept

Those living in a major city, particularly Dublin, will normally have a loading imposed. Some companies will also impose a loading if the car is not kept in a garage at night.

Excess and extras

Most insurance policies contain some type of an excess clause. This means that the policyholder is liable for an agreed amount towards the cost (e.g., the first 250 euro). The premium will cost more if this clause is taken out. It pays to shop around, because what might be considered an extra in one company (windscreen breakage, car hire in the event of the car being off the road, loss of personal effects, etc.) could be standard in another.

No claims bonuses

A no claims bonus is built up over the years and gives the policyholder a substantial reduction in the cost of his or her premiums. The ceiling for a no claims bonus is usually around 60%, leaving someone who has never had a claim with only 40% to pay. In the event of a minor accident, it is sometimes cheaper to pay for any damage out of your own pocket rather than claiming from your insurance and losing your no claims bonus. If you make a claim and subsequently lose your no claims bonus, you can build it up again in a few years. Some insurance companies will even allow you one claim without it affecting your no claims bonus.

Rules

You must have motor insurance to drive a car in your own name or as a named driver on someone else's policy. Failure to have motor insurance or driving without insurance in Ireland is generally punishable by:

• A fine of up to €2,500
• Disqualification of one year or more for a first offence and two years or more for a second offence, and
• At the discretion of the court, a term of imprisonment not exceeding six months.

In the case of a first offence of driving without insurance, the court may decide in special cases not to impose a period of disqualification or to impose a period of disqualification of less than a year.

Since 1 June 2003, where the courts in Ireland decide not to impose a disqualification, drivers convicted of a first offence of driving without insurance will incur 5 penalty points on their licence record in addition to any other penalty imposed by the court.

If you commit a second offence for driving without insurance, you will be automatically disqualified from driving. You should also note, that where a member of An Garda Síochána (Irish police force) believes that a vehicle registered in Ireland (or outside Ireland) is being used in a public place without insurance, the vehicle may be impounded.

If you are refused motor insurance

Individual insurers have the right to refuse you cover, but they must provide you with a reason for the refusal should you ask for one. However, even though you have been refused cover, you are entitled to go to the Declined Cases Committee of the Irish Insurance Federation who will obtain an insurance quotation for you. In order for the Committee to consider your case you must first have sought and been refused quotations in writing from at least three insurers. (See 'Further information' below).

How to apply

You can apply for motor insurance over the phone, in person or through a motor insurance broker. Motor insurance companies and insurance brokers are listed in public telephone directory. If you want to drive as a named driver on someone else's policy, then that person must contact their insurance company and arrange to have you insured under their policy.