Insurance World

Everyone has to agree to an excess of some kind when getting a car insurance policy – it’s the way the system works. Basically it means that if you have an accident and your car needs to be repaired, you will have to pay a set amount towards the bill. If the accident is your fault, you lose the money. If the accident is not your fault, the third party insurer reimburses you for the excess payment. If your car is written off, then your insurance company will deduct your excess from the settlement payment.

Things aren’t always that simple however, unfortunately there are a number of drivers on British roads that don’t have any insurance, so the question is, what happens with your claim if you have an accident with an uninsured driver?

The 1988 Road Traffic Act, section 143 clearly states that all drivers on the UK roads must have insurance for the vehicle that they are driving. The point of the insurance is that if you have an accident and it is your fault, you have the means to cover the cost of the damage incurred by way of your insurance policy. It’s a sad fact that a significant minority of drivers choose not to bother with insurance, disregarding UK law and saving themselves hundreds of pounds a year as a consequence. Someone has to pay for these drivers though, and it’s the people that do have insurance that foot the bill!

The Department of Transport estimates that as many as 5% of drivers are not insured on the vehicle which they are driving. Statistics also show that uninsured drivers are more likely to be involved in an accident. It’s a growing trend and is proving very difficult to eradicate.

If you have an accident, you are not at fault, and the third party is not insured, then you will be reimbursed by the Motor Insurers’ Bureau. Who funds them? The car insurance industry! That’s where some of your inflated premiums end up. You will also find that you’ll have to pay the agreed excess yourself, there will be no-one able to refund that for you.

Here’s the low-down on the basics about ‘excess’:

Compulsory Excess – this is the amount that the insurance company regards as the minimum amount that you must pay towards the cost of damages . This is agreed at the outset and depends on a few details you’re your age and your driving record. For example, if you are older and have a clean driving record, you could only have to pay a minimum of Ј50. Those with a more chequered driving history, or those that have not been driving for very long, could feasibly have to agree to pay Ј500. The average for most drivers is Ј100 .

Voluntary Excess – this is the amount over and above the minimum ‘compulsory’ amount set by the insurer that you are prepared to pay. This is an opportunity to lower your premiums, because if you can agree to a high excess, then the insurance company knows it won’t have to pay out as much if you need to make a claim. It’s one of the few sure fire ways of saving a few pounds on a car insurance policy, but you may not be offered the choice, it depends on individual insurers.

The garage won’t give my repaired car back until I give them a cheque for the excess – is this what usually happens?

This is completely normal, and you will have to pay and then get the money back from the third party insurer. Always give the car a good once over to ensure that the repairs have been satisfactorily completed. You also need to keep the receipt to get the excess back from the insurer, and just in case they dispute the charges, get a copy of the repair schedule so the insurer can see exactly what work was completed on your vehicle.

When you have qualified money, retirement accounts, IRA, 401k, or 403b IRS Guidelines require they begin taking minimum distributions from these funds at age 70 1/2. Required Minimum Distribution (or RMD) is designed to help you calculate the proper minimum distribution based on life expectancy.

When Do They Start?
Tax laws require you to begin receiving minimum distributions from you qualified money by April 1 of the year after you reach age 70 1/2. For example, if 70 1/2 on May 1, 2005, you initial distribution must be taken by April 1, 2006 and be based on the Contract Value as of December 31 of that year. Future distributions must be taken by December 31 of each year.

Changes With Minimum Distribution
The U.S. Treasury Department changed RMD Guidelines effective April 2002. The new guidelines require less money to be distributed each year, which helps reduce the tax liability and allows more to be passed on to the your heirs. The heirs also have more flexibility, allowing them to “stretch” out minimum distributions of inherited qualified funds based on their life expectancy.

The new guidelines must be used, for retirees turning age 70 1/2 in 2002. The old or new guidelines may be used, if age 70 Ѕ prior to 2002. It is important to note that three guidelines are for the Minimum Required Distribution. You always have the option to take more than the minimum required.

RMD Calculation Methods
The new 2002 guidelines use one method and base minimum distributions on the life expectancy of the owner only, unless the sole beneficiary is a spouse who is more than 10 years younger. Life expectancy multiples were also expanded under the 2002 guidelines, allowing a smaller required distribution to be taken. In the early years of the clients required distribution to be taken. In the early years of the clients required minimum distributions, it is possible the Contract Value will continue to grow.

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