Slide 1. Introduction.

            The class develops what comprehensive insurance is, what it covers and does not cover, and the implications for fleet management.

Slide 2. Comprehensive insurance.

• What is comprehensive insurance?.

            Buying a car means you have to take out car insurance. Any vehicle that is officially registered in Spain and other countries must have insurance that covers, at a minimum, compulsory civil liability.

            However, this insurance only covers damage you cause to third parties, not damage to your own vehicle. If you don't want to take any more risks than necessary, it is best to take out comprehensive insurance.

            This insurance offers the most comprehensive coverage for your car: theft, accidents, vandalism, etc. However, it does not cover everything: breakdowns and negligence are not included in this type of insurance, which can be taken out with or without an excess.

            Comprehensive insurance is the type of insurance that offers the most coverage. It covers mandatory civil liability and damage to your own vehicle, even if you caused the accident. Some people think that this type of insurance covers any damage, but there are important exceptions that you should be aware of.

            It is recommended that you take out comprehensive insurance if you have an expensive or new vehicle, or one that is more likely to suffer scratches or dents. Cars that are parked on the street or, despite being parked in a garage, are located between columns, near a curve, or near a door are more likely to be hit by another vehicle. On the other hand, older cars with a very low value can take out basic third-party insurance and thus avoid these more expensive types of insurance.

            Comprehensive insurance can be taken out in two different ways: with or without an excess. When you take out a policy with an excess, the premium is cheaper, but in the event of an accident, the insurance company will not cover the entire cost of repairing the vehicle, only a proportional part. In this case, the policyholder and the company agree at the time of signing the contract on the amount that each will pay. The higher the excess, the cheaper the policy.

• What comprehensive insurance covers.

            Comprehensive car insurance covers a large number of situations in which the company will cover the damage. Bearing in mind that this type of insurance is the most expensive of all car insurance policies, the premium will be higher than if you take out basic or extended third-party insurance.

            The coverage normally included in comprehensive insurance is:

1. Own damage.

            The insurer agrees to cover the costs and repairs in the event of an accident, rollover, or collision, even if you are at fault.

2. Third-party damage.

Mandatory civil liability, damage to other vehicles or persons.

3. Vandalism.

            In this case, both dents and scratches caused intentionally are included. If the scratches are caused by normal wear and tear on the vehicle parts, this option is not covered by comprehensive insurance.

4. Broken windows.

            This covers the rear window, side windows, and windshield.

5. Total or partial theft.

            Thieves may steal a part of the car or take the entire vehicle. In either case, if you have comprehensive insurance, you are covered.

6. Fire.

            Coverage includes cases where the car is totally or partially burned, whether by accident or electrical failure.

7. Animal collisions.

            This is usually included in comprehensive insurance. However, make sure it is listed in the contract you are signing.

8. Weather events.

            Certain types of damage caused by nature are covered, such as hail, flooding, strong winds, or falling branches. However, not all natural phenomena are covered.

9. Damage caused by rodents or wildlife.

            Comprehensive insurance also covers damage caused by rodents, for example, if they chew through an engine cable.

10. Legal defense.

            Legal expenses and fine management.

11. Roadside assistance.

            From kilometer 0, including tow truck and, in some cases, replacement vehicle or accommodation.

• It does not cover comprehensive insurance.

            Although comprehensive insurance coverage is quite comprehensive, it does not cover all situations, which means that the insured will have to bear the costs themselves.

1. Wear and tear and maintenance.

            The clutch, brakes, tires, and batteries are some of the items that need to be replaced from time to time due to wear and tear, and this is not covered by comprehensive insurance.

2. Mechanical breakdowns.

            Unless they are a direct result of an accident.

3. If you drive under the influence of alcohol or drugs.

            The insurance company will not cover any damage you may have caused.

4. If you drive negligently or use the car inappropriately.

            If you use your car to participate in legal races on circuits, rallies, hill climbs, raids, etc., beyond the considerations that this implies, you should take out specific insurance for this type of event, as a conventional policy does not cover you for any incidents. And let's not even mention if the car involved has participated in an illegal race.

5. If you do not report an accident within the period established in the contract, you will not be covered either.
6. Having an accident with an expired MOT.

            Driving with an expired MOT carries risks and, if you have an accident, your insurance will not cover it. However, the insurance should cover it if your car has been involved in an accident, you were not at fault, and it can be proven that not having passed the MOT had nothing to do with the accident.

7. Driving without a license.

            Just think about whether you would be able to take out car insurance if you didn't have a license, if your license wasn't valid, or if you had no points. No, right? Well, if you cause an accident, your insurer will, logically, look the other way.

8. Cases of fraud involving family members, neighbors, yourself...

            Trying to be clever with car insurance is not usually the best option. They will not hesitate to call in experts or detectives to prove, if necessary, that the damage to the car was caused deliberately by the insured person or that they involved a family member, neighbor, coworker, etc., so that the insurance company will pay for the repairs.

9. Driving on unpaved roads.

            If you often drive your car on unpaved roads, you should consider taking out a policy that offers coverage in case you need assistance off roads suitable for vehicle traffic. Otherwise, your insurance may not provide assistance.

10. Exceeding the number of passengers or cargo.

            Each vehicle has a stipulated number of seats and a maximum weight it can carry. Check the vehicle's technical specifications. If you have an accident and one or both of these limits have not been respected, the insurance company will not be liable.

11. Drivers under 25 years of age not declared in the policy.

            Be careful if you are under 25 and drive a car that is not listed on the insurance policy, a very common situation when you occasionally use a family member's car, for example. If you have an accident, the insurer may refuse to pay because your name is not on the policy for the vehicle involved, and the owner will be personally liable for any damage.

12. Modified cars: undeclared equipment.

            If you add any extra accessories to your vehicle that are not factory-fitted, you should first notify your insurance company. Logically, these items must be properly approved. Insurance companies offer specific policies for these tuned cars, but they are more expensive. Now you will understand why: tuning accessories make your car more attractive or give it more features, making it more appealing to thieves.

            In addition to these circumstances, there are certain types of coverage that are not included in comprehensive insurance, although the Spanish Insurance Compensation Consortium will cover them:

1. Extraordinary natural phenomena: flooding due to torrential rain, river flooding, earthquakes, tsunamis, volcanic eruptions, tornadoes, or winds exceeding 75 mph.
2. Acts of terrorism, rebellion, sedition, riots, or civil unrest.
3. Events classified as extraordinary by the State.
4. Events or actions by the Armed Forces or Law Enforcement Agencies in times of peace.
   • What types of comprehensive insurance are there?.

            There are two types: comprehensive car insurance with an excess and comprehensive car insurance without an excess. The difference between the two is that, in the first case, the insured party assumes part of the repair cost, known as the excess. An agreement is reached with the insurer to pay an initial amount, while the rest is covered by the company.

            For example, if the excess is €300 and the damage costs €1,000, the insured pays €300 and the insurer pays €700. This option has the advantage of a lower premium, although in exchange you will have to pay a certain amount if you have your own damage.

            In both options, comprehensive insurance includes the same coverage. However, if you opt for comprehensive insurance with an excess, broken windows are usually covered without having to apply the excess.

• Comprehensive insurance based on the age of the car.

            Insurance policies are usually taken out based on the age of the car. Generally, comprehensive or comprehensive with excess insurance is taken out for fleet vehicles less than 4 or 5 years old.

            In any case, it is important to compare the coverage offered by different companies. The cheapest option is not usually the best, as you may be left stranded in the event of a breakdown without roadside assistance, or if it does not include theft and window coverage, which are very necessary, especially if you live in the city.

            Comprehensive insurance coverage usually varies depending on the insurer. However, there is a set of coverages that are common to all of them and are usually included in any basic comprehensive insurance policy. Along with civil liability insurance, which is mandatory for any vehicle, other coverages would be added, such as voluntary liability, own damage, legal defense for the driver, travel assistance, theft, glass breakage, fire or explosion of the vehicle, and even compensation in the event of temporary deprivation of the driver's license or loss of points.

            There are also other additional coverages that may be of interest, such as replacement vehicle coverage, compensation or monthly payment allowance for license suspension, assistance in case of fuel shortage or loss of keys.

• Fleet insurance.

            Fleet insurance policies are specifically designed to cover one or more vehicles belonging to the same company under a single contract.

            This allows companies to consolidate the administrative and financial management of all their vehicles into a single policy. This significantly reduces the time spent on administrative procedures and makes it easier to keep track of expiry dates, coverage, and claims.

            In addition, fleet insurance is highly customizable. Each company can adjust the coverage to the particular characteristics and risks of its activity, and vary the specific coverage depending on the type of vehicle or its intended use.

• Implications for fleet management.

            The main consequence is the cost of insurance if you choose comprehensive insurance or comprehensive insurance with an excess.

1. Age of the vehicle.

            This is a good option for new or nearly new vehicles with a high residual value, for vehicles less than 3-4 years old.

2. Comprehensive insurance or comprehensive insurance with excess.

In my experience, I have never come across a fleet insured with comprehensive insurance, but rather with comprehensive insurance with excess or third-party insurance.

            Comprehensive insurance with excess is cheaper than comprehensive insurance, but bear in mind that for each accident report to the insurer, you have to pay an amount of money established in the policy.  

            You have to carry out a financial study, establishing a forecast of the number of claims you are going to make per year using the fleet's history, and calculate the total cost you are going to pay for having the excess, which we call the “cost of the excess.”

            You need to know the difference between the cost of comprehensive insurance and comprehensive insurance with an excess, subtracting both values, which we call the “Cost difference between comprehensive insurance and insurance with an excess.”

            If the “Cost difference between comprehensive insurance and insurance with an excess” is greater than the “Cost of the excess,” comprehensive insurance with an excess is better because it is more economical.

            If the “Cost difference between comprehensive insurance and insurance with excess” is less than the “Cost of excess,” comprehensive insurance is better because it is cheaper.  

3. Vehicle downtime.

            When the insurance company is notified that the vehicle needs to be repaired due to an accident or incident, the vehicle must be inspected to assess the damage and establish the cost of repairs. The inspection is not immediate, and the repair time must also be taken into account, meaning that the vehicle is out of service for a period of time.

            In an urban fleet where there are many dents and scratches on bumpers, mirrors, etc., if we have comprehensive insurance and every time we have a dent or incident the vehicle has to be repaired, it will be out of service for a long time.

            If our fleet provides its own service, such as street cleaning, urban waste collection, goods transport, ports, airports, public works machinery, etc., it is recommended that every six months or a year, if the vehicle has dents, scratches, etc. that need to be repaired, a report should be made to the insurance company.

            If our fleet is leased, rented, used for urban car sharing, etc., in which a customer pays to use the vehicle, any dents, scratches, etc. must be repaired immediately because the vehicle must be in perfect condition. The customer pays for a vehicle in perfect working order.

    It is important to remember that our vehicles represent the image of our company and must be in perfect condition. 

4. Drivers must be trained.

            A protocol must be established for responding to accidents or incidents, and above all, the fleet manager or the person in charge of insurance management must be notified so that they can report it to and deal with the insurance company.

            Drivers or vehicle users must be informed of what is and is not covered by the insurance, and what they cannot do with the vehicle.

5. Type of insurance.

            In a vehicle fleet, insurance must be taken out according to vehicle type and age.

            You can have one type of vehicle with comprehensive insurance and another type of vehicle with comprehensive insurance with an excess, or third-party insurance. 

            In my experience, I have come across some fleets that have all their vehicles insured under the same type of insurance, without distinguishing between the type of vehicle, the age of the vehicle, or the residual value, which is bad practice.

6. Multiple insurers.

            When I was a fleet manager for the street cleaning service in Madrid, there were several insurers for the fleet.

            You can have one insurer for the entire fleet of vehicles, but you can also have several insurers, each for a different type of vehicle and age.

            You can have one insurer for sweepers or solid urban waste collection trucks because they specialize in that type of vehicle, another insurer for trucks, and another insurer for passenger cars and SUVs.

7. Number of offers.

            Collective insurance contracts allow insurers to offer more competitive rates and volume discounts. This translates directly into a significant reduction in the overall cost of insurance for our company.

            It is recommended to request quotes from at least three insurers to compare prices and coverage, as there may be significant differences.

8. Update the policy regularly.

            The needs and composition of the fleet may change, so it is crucial to review and adjust the policy regularly, at least once a year.

Slide 3. Thank you for your time.

            The class has developed what comprehensive insurance is, what it covers and does not cover, and the implications for fleet management, see you soon.