I03E - Car Insurance

afpop negotiates agreements, for its members, whereby special policy terms and conditions are available to members of the Association, but these are withdrawn if the policy-holder ceases to be a member.

The terms and conditions of policies issued by other insurance companies or agents may vary and members are advised to make detailed enquiries before deciding where to place their motor vehicle insurance. Members should also take account of the position of any intermediary they work through, particularly the assistance that is likely to be provided in the event of a claim having to be made. 

Third Party Liability Insurance
All vehicles driven in Portugal must have insurance in place covering damage to third parties (Responsabilidade Civil). The legal minimum liability cover is €7,750,000 (€6,450,000 for Personal Damages and €1,300,000 form Material Damages) but it is recommended that the policy provide the maximum cover of €50,000,000. 

Third Party Liability Insurance covers the owner of the vehicle against damage caused to others.  It does not cover damage to the policy-holder’s vehicle.

In this respect it should be noted that in Portugal it is the vehicle, which is covered, not the driver as is the case in some other countries. The premium payable is dependent on the engine capacity of the vehicle and its gross weight.

Third Party, Fire and Theft Cover
While Third Party cover is the legal minimum, owners are recommended to extend the cover to include loss due to fire or theft. The additional premium is small.

Own Damage Cover
Cover for damage to the policy-holder’s car caused by the driver (either the owner or an approved driver) can be arranged at additional cost which can be quite substantial. Owners of new or reasonably new cars should consider this addition where the cost of repairs to a seriously damaged vehicle could far outweigh the extra policy cost. As the value of the vehicle decreases however, many owners are prepared to accept the cost of repairs or even write-off in return for a substantially reduced premium. The decision whether to continue paying the additional premium is one which each individual must make but many take the view that this element should be dropped when the value of the vehicle falls below €5,000.

An important consideration when deciding whether or not to take out own damage cover, is the no-claim bonus entitlement of the owner. The maximum bonus/discount offered in Portugal is 50% but the level a new client receives is dependent on the no-claims certificate he/she is able to provide.

As in other countries, a claim against damage for which the owner or driver is responsible, results in the loss of the no-claims bonus. 

Members taking out own damage are advised to check the arrangements which apply in the event of a claim being made, with their broker or agent.

It should also be noted that the no claims bonus it does not apply to all elements on the premium calculation.  Certain government levies for instance must be paid in full.

The other major factor in determining the premium is the value placed on the vehicle. As in other countries, insurance companies in Portugal will only pay out on the basis of the agreed value of the vehicle and this can lead to misunderstandings. The value for insurance purposes should in all cases be discussed with the broker or agent concerned; there is no point in placing a higher value on a vehicle than the insurer will acknowledge and so paying a higher than necessary premium.

As a vehicle ages so its value decreases. Most insurance companies in Portugal reduce the amount which would be paid in the event of a total loss, on a monthly basis. For example, during the first year of a car’s life the value declines by 2% per month amounting to a 24% reduction in the first twelve months. In the second year the reduction is a further 12%. 

Unless the insured party advises otherwise, the insurer will reduce the value of the vehicle according to an industry-agreed formula.

Other Provisions

Damage to Windscreen/Glass Breakage 
For a small extra premium cover can be arranged to replace a broken windscreen or window glass without affecting the owner’s no claim bonus. This add-on is highly recommended.

Loss of Use / Replacement Vehicle (Breakdown, Theft or Accident) 
In the case of an accident resulting in the vehicle being unavailable for a period, provisions can be made for a replacement vehicle to be hired at the insurer’s expense for a period, the additional premium being dependent on the number of days covered. 

Personal Accident
In the case of death or injury resulting from an accident caused by a third party, damages will be claimable from the third party’s insurer. However, if the accident is the fault of the insured party, no payment will be received unless a Personal Accident extension to the basic policy has been arranged. Four levels of compensation are available providing up to €50,000 for death and €10,000 for treatment of injuries. This cover applies to both the driver and passengers.

Assistance during Journey
Most insurance policies automatically include the provision of assistance in the event of breakdown or accident both in Portugal and in other European countries. A telephone contact number is provided and is normally available on a 24-hour basis. However only arrangements made via this contact will be recognised and paid for by the insurer.

“Green” Card (International Motor Insurance Card)
“Green” Cards are required to be provided by all insurers and are accepted as proof of insurance for the period stated and, in the countries, designated.

It is standard practice for Portuguese insurers to provide a green card recognised in other European countries.  The countries included are indicated on the card.  For some countries, such as Spain, this will also include cover for payment of a bond in case of accident.

In the event of an Accident
The Insurer provides instructions on what to do in case of an accident. This includes an Accident Form, which should be filled out immediately, and ideally, be signed by both drivers if another vehicle is involved.  It identifies the drivers, the vehicles, their insurance companies, and describes the circumstances of the accident and the damage caused.

Copies of the form in English and German are included in afpop’s ‘Driving in Portugal’ booklet, but the form to be completed is the Portuguese version. 

Accidents involving injury or damage to third parties (other than another insured vehicle) must be reported to the Police (GNR or PSP). It is also advisable to call the Police if another party involved in an accident refuses to sign the Accident Form.

Changing Insurers
As with other types of insurance, holders of motor vehicle policies wishing to change insurers, are required to give notice to the established insurer at least 30 days before the policy’s termination date. Other possibility is not paying the premium and the policy will be automatically cancelled with effect from the renewal without any penalty.