How does motor vehicle or car insurance in Switzerland work?
Swiss motor vehicle insurance englobes cars, old timers, scooters, motorbikes, camping cars, professional vehicles and boats.
Three modules of motor vehicle or more specifically Swiss car insurance can be subscribed to, two are optional and one is obligatory.
1) Liability: Liability insurance is obligatory for all motor vehicles. License plates cannot be delivered without motor vehicle liability protection. This covers the driver for any damage done to a third party or to their motor vehicle or belongings.
2) Partial Casco: Partial Casco basically insures the car for everything except collision and parking damage. Protection includes: fire, lightening, explosions, short-circuits, cables eaten by rodents, natural events (winds more than 75kmh, hail, snow damage, land and rock slides), theft, broken glass, collisions with animals and vandalism.
3) Full Casco: Complete collision and damage protection caused by the policy holder to his or her own car.
Swiss car insurance is valid in Europe and the countries bordering the Mediterranean as is specified on the green card that is delivered by the insurance company. Outside these territories country specific car insurance is required.
In Switzerland each Canton has one or more motor vehicle administrative centres, which delivers car registration papers, license plates, import formalities, driving licenses and technical controls (services des autos). The centres are all linked to the insurance companies via a centralized computer system and can only deliver license plates once an insurance company has sent them an electronic certificate which confirms that the car and driver are insured, this makes it impossible to drive without insurance. If a driver does not pay the car insurance premium an order is sent to the police to withdraw the license plates from the car until payment has been made, accompanied by a fine.
What amount should my car be insured for in Switzerland?
The car must always be insured for the catalogue price, plus options. Underinsurance applies to car insurance, so the amount covered must be as precise as possible.
Our expert’s recommendation:
If the car’s options are worth more than 10% of the catalogue price one must announce it to be fully compensated in case of a total loss claim and to avoid underinsurance. When buying a used car be careful to get the most accurate catalogue price possible, options included. Be aware of the insurance company’s bonus-malus system (BMS) and the observation period they apply.
What deductible should I choose?
The rule is generally the higher the deductible, the lower the yearly insurance premium. The complexity of car insurance in Switzerland is that the premium is made up of three separate modules and four or five extended coverages that are almost always included in the Swiss car insurance plan for vehicles that are less than five years old.
.Liability module
Minimum : 0.-
Maximum : 3000.- (higher is possible, but very rare)
.Partial casco module
Minimum : 0.-
Maximum : 3000.- (higher is possible, but very rare)
.Full casco module
Minimum : 250.-
Maximum : 3000.- (higher is possible, but very rare)
Our expert’s recommendation:
The figures below can vary between providers and car types, but offer guidance. As car insurance in Switzerland is divided into modules it can help to understand the rough breakdown of each module in the total yearly insurance premium (excluding all extended coverage options).
Liability module : 45% of the total premium
Partial casco module: 20% of the total premium
Full casco module: 35% of the total premium
For the liability and full casco modules the difference between the minimum and 1000.- deductibles will have a limited effect on the yearly premium (often less than 20%), so the minimum can be considered.
For the partial casco module the difference between the minimum and 500.- deductible can decrease the price of this module by as much as 30%; so even though this module often only represents 20% of the total premium a 500.- deductible might be worth considering.
Some providers offer a full casco deductible as low as 250.- if the policyholder accepts to use their recognized partner for repairs or for other incentive plans.
Cars that are more than 7 years old (except old timers and collectors) are usually insured without the full casco module due to the current value and total loss principles. Depending on the catalogue value of the car the partial casco module is also not a viable option for older cars.
The current value supplement will add roughly 10% to the current value of a car that is more than 7 years old.
What value or amount is reimbursed in case of a car insurance total loss claim?
A total loss claim will be reimbursed at current value.
This amount can be significantly improved with current value supplement extended coverage; the best providers will refund 100% of the value of the car for the first two years of its life with the supplement.
Extended coverage that should always be included in car insurance in Switzerland
.Bonus protection
Always include bonus protection in your Swiss car insurance plan to avoid costly premium increases following a liability, partial or full casco claim.
.Gross negligence
Always include gross negligence in your car insurance in Switzerland so that the insurance company does not reduce your compensation if negligence can be associated to your claim.
.Parking damage
Always include parking damage in your Swiss car insurance plan if the vehicle is less then 3 or 4 years old. Most companies refuse parking damage on older cars or ask for photos or for an expert to view the car if it is more than 5 years old (to make sure that there is no pre-existing damage to the car).
.Current value supplement
Always include current value supplement in your car protection plan to compensate for the rapid depreciation rate of a car in case of a total loss.
Extended coverage that can be added to car insurance in Switzerland:
.If you often travel with a lot of expensive personal belongings in your car
Personal belongings extended car insurance coverage will cover belongings that are broken in an accident and for theft if the car is locked and broken into.
.If you would like to avoid surprises when headlights and rear-view mirrors are broken
Most companies offer an extended glass and associated materials protection which will cover smashed light bulbs, rear-view mirror holders and other associated materials.
.If you ride a motorbike
Damage and destruction of safety gear (helmet, protective clothing, boots and gloves). Usually covered at replacement value if less than two years old, and a reduced amount if older.
Theft of the above items is also covered if they are attached to the vehicle (helmet) or in a locked top box.
.If you require an extended protection plan following an accident
If you or your passengers have limited accident, death and disability protection extended accident and treatment costs can be added to the car insurance plan. Depending on the provider benefits can include private hospitalization, medical and dental treatment, medical transport, damaged material, rooming-in costs, loss of income, death and disability benefits,
.If you require an assistance package
If you do not benefit from the constructor’s or a motor vehicle club assistance package or want to optimise the assistance package comprehensive roadside assistance packages can be added to the Swiss car insurance plan (assistance limited to the insured car) or to the personal insurance plan (assistance while driving any car in Europe except a rental).
Examples of car insurance claims in Switzerland
.A hits B’s car from behind and damages it when B abruptly stops at a red light.
A’s car liability insurance module will pay for the repair of B’s car.
.A slides off a wet road and damages his car.
The repair to the damage of A’s car will only be paid by the insurance company if A opted for the full casco module. If A’s car is a total loss A will not be compensated if he does not have the full casco module.
.A’s car is hit by B’s car because B went through a red light.
The repair to A’s car and all related expenses will be paid for by B’s car liability module. If B does not have the gross negligence extended car insurance coverage his insurance company will reduce the compensation obliging B to pay for part of the claim himself.
.A’s car collides with an animal on the road and is damaged.
The damage to the car will be paid for through the partial casco module. The insurance company can request a report from the local authority to confirm the collision. Always take a picture of the animal for the claims file. Damage caused by a maneuver to avoid hitting an animal is generally not covered.
Glossary of Swiss insurance terms – Car insurance
Underinsurance
Underinsurance is the act of under estimating the true value of the risk to be insured.
This results in a slightly lower annual insurance premium but will also result in the equivalent percentage loss when a claim is made (“apply average” in insurance terminology).
An example illustrates that the loss occurred from a claim can greatly exceed the saving on the insurance premium.
If the policyholder underestimates the value to be insured by 50% they will be penalized by the same amount (50%) if they make a claim:
Value declared: 20’000.- / real value 40’000 (underinsurance value 50%)
Claim amount / damage: 10’000.-
Compensation: 5’000.- (-50%)
To insure the extra CHF 20’000.- would have cost between CHF 100 and 200.- per year; the loss on the claim is CHF 5’000.-
Bonus protection
The malus will not be applied for one claim per observation period thanks to this extended car insurance option that should always be included in the protection plan. Further bonus protection can be applied by some providers if the policyholder accepts to use their recognized partner for repairs or for other incentive plans.
Observation period
The 12-month period chosen by the insurance company to evaluate the degree of the no claims bonus as of January 1 of each year as per the bonus-malus system (BMS). As the premium must be calculated for a calendar year the observation period is almost never from January to December, each company is free to choose the 12 month period they prefer.
No claims bonus
Each year that a policyholder does not make a claim the insurance company rewards them with a discount or bonus of, on average, 5%. This means that their yearly premium will decrease each year until they get to the maximum no claims bonus which is generally around 35% of the full yearly premium. This is known as the bonus-malus system (BMS). Each liability, partial or full casco module is rewarded separately, so to calculate the precise impact on the yearly premium one must apply the bonus to the relevant module.
Malus
The malus system penalizes claims made by the policyholder for which he or she is responsible (at-fault accidents) by a premium surcharge or increase of 20% the full year after the claim is made. If the no claim bonus is at 5% per year it will take the policyholder 5 years to get back to the initial premium after an at-fault accident. This is known as the bonus-malus system (BMS).
Each liability, partial or full casco module is penalized separately, so to calculate the precise impact on the yearly premium one must apply the malus to the relevant module.
Current value
The current value is the market value of the car on a given day taking into account depreciation for age, mileage and condition. The base value of the car is the catalogue price plus options. Typical depreciation is calculated at roughly 10% per year.
Current value supplement
With the current value supplement the policyholder will always receive a total loss compensation which is 10 to 20% higher than without it. The best companies compensate 100% of the catalogue price during the first two years of the life of the car. This amount then decreases by 10% to 20% per year so a three year old car would be compensated at 80% of its catalogue price, a four year old car by 70% and a five year old car by 60%.
Total loss
The insured vehicle is deemed a total loss when the cost of reparation exceeds its current value or if the vehicle is stolen and not found within 30 days. With the current value supplement the insured car is deemed a total loss in its first two years when the cost of reparation exceeds 65% of the catalogue price.
Replacement value
The amount required to replace the broken item at today’s price.
Gross negligence
The obligation to observe the basic principles of security or care that can be expected of any reasonable person in the same situation and circumstances.
Parking Damage
Parking damage is damage done to a stationary parked car by an unknown third party. If the third party is known it is their liability insurance that will compensate the damage.
