Slide 1. Introduction.
The class develops what third-party insurance covers, when it is sufficient, and the implications for fleet management.
Slide 2. Third-party insurance.
- What is third-party insurance?.
Protecting accident victims is a responsibility that requires a thorough understanding of what third-party insurance covers, as this policy is the minimum requirement for driving in Spain and many other countries. Its purpose is to ensure that, if you cause an accident through recklessness or negligence, damage to other people or property is covered. This prevents high financial claims and ensures compliance with current legislation. In a context of changing traffic and greater road control, having this coverage is essential.
Third-party insurance is the most basic and economical type of insurance that, by law, covers material and personal damage that you may cause to other people (third parties) if you are responsible for an accident, but it does not cover damage to your own vehicle.
It generally includes compulsory civil liability and, depending on the company, can be extended with extra coverage, such as travel assistance, legal defense, theft, fire, and windows. The “extended third-party” option is popular, as it adds this coverage at a moderate cost.
This covers material damage and personal injury caused to third parties, allowing you to drive with peace of mind without the need for additional coverage.
Understanding its actual scope helps you avoid unnecessary payments and choose the most suitable policy based on the type and age of the vehicle.
- Types of third-party insurance.
This type of insurance is not only the most affordable, but it also allows you to comply with the law and protect other people, as well as certain parts of your own car, depending on the type of coverage. Depending on the company, it is possible to extend the coverage in exchange for a higher premium.
In a market where there is an increasing variety of vehicles, from compact cars to family cars and SUVs, coverage needs may vary. Therefore, it is a good idea to be familiar with the three most common types of coverage.
- Basic third-party insurance.
This is the minimum insurance required by Spanish law and the laws of many other countries. It is the most economical option, as it only covers damage caused to other people, including their property. Compulsory civil liability has very broad limits: up to €70 million for injuries and €15 million for property damage.
Additional services can be added to this coverage, such as roadside assistance or legal defense. These extensions usually slightly increase the annual premium, but can be useful if you make long journeys or park in areas with a risk of accidents.
- Extended third-party insurance.
Extended third-party insurance includes all the coverage of basic third-party insurance and adds protection for certain types of damage to the insured vehicle. The most common policies include broken windows, fire, theft, and even damage caused by collisions with animals.
This option is very popular among drivers of pre-owned or regularly used vehicles who are looking for a balance between price and peace of mind, but without paying the cost of comprehensive insurance.
The most common types of coverage that can be extended are:
ü Broken windows.
Normally covers the replacement or repair of side windows, as well as the rear window and windshield.
ü Roadside assistance.
Tow truck, taxi, etc., if you break down.
ü Legal defense.
Legal expenses.
ü Fire.
Coverage includes fire damage to the entire vehicle, both inside and out.
ü Theft.
Covers both damage caused by attempted theft and theft itself.
ü Other coverage.
Replacement car or assistance in the event of a collision with game animals.
- Third-party insurance with excess.
In this case, the insured party assumes a fixed portion of the damages in the event of an accident. If you take out an excess of €500 and the repair cost is €1,500, you will pay €500 and the insurer will cover the remaining €1,000.
This formula makes the policy cheaper, but you must assess whether the excess amount fits your budget. It is only recommended when the vehicle has a certain value or when you want to maintain affordable insurance without giving up key coverage, such as windshields or theft.
- Factors that influence the price of third-party insurance.
The price of third-party insurance depends on both the driver and the vehicle. Age, years of experience, accident history, and the specific model directly influence the annual premium. The cost of repairing the car also has an impact: for example, a hybrid or a model with complex technology could mean more expensive repairs.
- When is third-party insurance sufficient?.
Third-party insurance is adequate when the value of the vehicle does not justify additional coverage. It is common for older cars, vehicles used occasionally, or classic models, as the cost of repairs is not a significant expense for the driver.
For new, high-end cars or those with expensive equipment, extended third-party insurance or even comprehensive insurance may be more appropriate. The same applies if you park on the street or regularly drive in busy areas. For family vehicles or large SUVs, slightly higher protection is usually recommended due to the cost of repairing the bodywork or windows.
- Practical choice of third-party insurance.
Choosing third-party insurance depends on the actual use of the car, your budget, and your driving style. The basic policy complies with the civil liability required by law and adequately covers damage to third parties.
Extended third-party insurance allows you to enjoy more comprehensive protection at a moderate increase in price, ideal for pre-owned cars or for those looking to add peace of mind for things like windows, theft, or fire. The option with a deductible is recommended when the deductible is low and you are willing to assume part of the cost.
To make a decision, it is advisable to analyze the value of the vehicle, the environment in which it is driven, and how much it would cost to repair common damage. Comparing rates and coverage helps you find a policy that suits your needs without paying too much, making it easier to choose the right purchase.
- Fleet insurance.
Fleet insurance policies are specifically designed to cover one or more vehicles belonging to the same company under a single contract.
They allow 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 and coverage depending on the insurance taken out, and any extensions to the coverage.
The following measures are recommended.
- Fleet insurance.
The minimum number of vehicles required for a fleet to be considered as such varies depending on the insurer, although it generally ranges from 5 to 10 vehicles.
It is essential to consult with each insurance company to find out their specific criteria and ensure that you meet the requirements.
- Third-party insurance.
Third-party insurance for a fleet is recommended for vehicles with a low residual value, normally from the fifth or sixth year of the vehicle's life.
In my experience, this is the most commonly used insurance for fleets, with additional coverage for windows, roadside assistance, or fire.
- Additional coverage.
It is recommended to extend the insurance to include windows, roadside assistance, and fire or theft if these risks are present depending on the type of vehicle.
Fleet vehicles are usually parked at our facilities, so extending the theft coverage does not make much sense. If a vehicle is parked on the street, theft coverage can be added.
Large fleets usually have a person or department in charge of insurance management, who handles legal defense or claims for fines, so there is no need to include this in third-party insurance, but in a small fleet where there is no one to do this, it is advisable to include it.
In vehicles such as sweepers, public works machinery, etc., the windows are very expensive, and it is common for them to need to be replaced.
In fleets of vehicles used for solid urban waste collection or street cleaning, where strikes are common, picketers often break windows and puncture tires.
If, for example, we rarely replace windows in passenger cars or SUVs, it is not worth extending coverage to this type of vehicle.
In vehicles such as street sweepers, which collect dirt from the streets, they may pick up an unextinguished cigarette or the remains of a fire and cause the vehicle to catch fire. When I was a fleet manager for the street cleaning service in Madrid, this happened to me several times.
Electric vehicles have a low probability of catching fire, but it can happen, so it can be included in third-party insurance.
In a fleet of vehicles, there are always vehicles that need roadside assistance, usually due to breakdowns, and a tow truck is needed to take the vehicle to our facilities or an external repair shop, so it is recommended to include this in third-party insurance.
If it is not included in third-party insurance, it is recommended to reach an agreement with a tow truck company.
- Other coverage extensions.
There are exceptional cases that depend on each fleet. For example, if catalytic converters are stolen from vehicles in our area and our fleet is at risk, it is recommended to include this in the insurance.
- Third-party insurance with excess.
This is a good option for new or nearly new vehicles with a high residual value, for vehicles less than 3-4 years old.
In my experience, fleets tend to use this type of insurance for vehicles less than 3-4 years old with a high residual value.
- Type of insurance.
In a vehicle fleet, insurance must be taken out according to the type of vehicle and age.
You can have one type of vehicle and high age with third-party insurance with extended coverage, and the same type of vehicle and low age with third-party insurance with excess.
In my experience, I have come across some fleets that have all vehicles with the same type of insurance, without distinguishing the age of the vehicle or the residual value, which is bad practice.
In my experience, I have never come across a fleet insured for comprehensive cover.
- Multiple insurers.
When I was a fleet manager for Madrid's street cleaning service, 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.
- 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 that you request quotes from at least three insurers to compare prices and coverage, as there may be significant differences.
- Update the policy periodically.
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 third-party insurance covers, when it is sufficient, and the implications for fleet management, see you soon.
