How `comprehensive' is your car insurance?

Blanket cover may still leave you out of pocket. By Edmund Tirbutt

In the absence of blissful ignorance, peace of mind is invariably worth paying for. However many insurance policies that purport to provide blanket cover still leave much to be desired. This is particularly true of motor insurance.

Two-thirds of the UK's private motorists have "comprehensive" cover, yet anyone who claims may lose part of their no claims discount and will probably have to pay a policy excess. The cost of each may well be more than pounds 100.

A standard comprehensive motor policy does not cater for the fact that claimants may have to hire an alternative car while their own is being repaired. Nor does it cover legal costs when claiming against third parties, and few people qualify for legal aid.

Claims often cost tens of thousands of pounds to resolve. Even innocent parties involved in the most mundane of accidents may face a total bill of more than pounds 1,000. There is a strong case for taking out Uninsured Loss Recovery (ULR), a claims handling service backed up by legal expenses insurance which helps to recover these potential losses for non-fault accidents.

The better policies cover drivers and passengers throughout Europe for at least pounds 50,000 per claim in respect of legal expenses. They also provide access to a 24-hour legal advice and assistance helpline.

ULR, which has been available in the UK since the mid-1970s, normally costs between pounds 8 and pounds 12 a year, compared with pounds 300 to pounds 400 for the average motor policy. It is normally sold as an add-on to a motor policy via an insurance company, broker or other intermediary.

In some cases it is provided free by car manufacturers, motor clubs or even direct insurers. The Insurance Service, for example, offers ULR free to every motor insurance policyholder for the first year.

An even greater potential stumbling block concerns the possibility of being insured with an unsuitable provider. Of particular concern is the fact that some of the newer and smaller providers - often garages and car-hire firms - do not actually have any insurance backing. Furthermore they do not always make this clear to the intermediaries they sell through. Policyholders could thus be left without cover.

Many smaller ULR providers do not deal with claims in-house but farm them out to solicitors. Much work is done on a conditional fees basis; ie, solicitors do not have to be paid a fee unless they actually win the case, and they could be vulnerable to a rise in the cost of legal work.

The main providers have ample resources. But policyholders who already have ULR cover would be well advised to check that they are with a suitable provider, and whether they are members of the Motoring Uninsured Loss Recoveries Association (MULRA).