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Minor Damage Insurance – is it worth it?

Solicitor Tina Patel discusses the merits of Minor Damage Insurance

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Tina joined Leigh Day in 2011 and works in the product safety & consumer law department. She is an experienced litigator who specialises in defective product, cosmetic injury and food safety claims.  She has extensive experience in dealing with group actions. 
What is Minor Damage Insurance?
Minor Damage Insurance (MDI) is frequently offered as an extra to consumers purchasing new cars. The policy is designed to cover consumers in the event damage is caused to vehicles such as light scratches and dents. Provided the damage fits the specification detailed under the terms of the policy, your car will be repaired at no cost to you save for a small policy excess.
Is it worth it?
Sometimes, the MDI policy is thrown in as an ‘extra’ when a new vehicle is purchased. Many find the policy attractive particularly when purchasing vehicles under leases to help maintain the vehicle. Also why turn down a free product which you could benefit from?
Consumers should be mindful however of the strict terms and conditions which apply under such policies and ensure that they carefully read the wording of any policy which is offered. The top 5 things all consumers should bear in mind when taking out such policies are:
  1. What will a claim on the policy cost me?
  2. What are the limitations to the policy? – is there an aggregate limit on the policy? Is there a maximum amount the insurer will pay for each repair? What is classified as minor damage? Is there a size restriction? Are there time limits in which to report claims? If so, this is a difficult term to comply with given the average person will not immediately spot a bumper scratch.
  3. Exclusions also apply to such policies – often even where the area of damage appears to be relatively small, it may be necessary to replace an entire body panel of the vehicle and thus you will be left to pick up the cost of such repairs.
  4. Often repairs must be carried out by body repair shops who have been authorised under the terms of the policy and therefore you may not be able to have the works undertaken by your local garage which you have visited for the past 20 years.
  5. Be wary of your rights to cancel the policy if you later change your mind. It is likely that you will incur administrative charges if you are outside of the 30 day cooling off period or have previously made a claim under the policy.
We live in a world where consumers are bombarded with adverts about the miss-selling of Payment Protection Insurance.  Will this happen with Minor Damage Insurance? Potentially yes if consumers have not been told, or are not aware that there is a potential misrepresentation at the time of purchasing MDI of the exact terms of the policy and any limitations and exclusions which apply. 

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