Why do I write about car insurance issues so much?
Because every day I receive desperate e-mails from one or more of the one-third of South African motorists who choose to insure their cars — despite extreme budget pressure — in the belief they’d be covered if disaster struck.
As it does, in South Africa, alarmingly often.
They’re desperate because after becoming a hijacking, theft or accident statistic and submitting a claim, their insurer sent them a rejection letter for reasons they didn’t anticipate.
They’d failed to call their tracking company every six months to ensure their device was still working as their tracking contract required, for example — an issue I covered in last week’s column.
Or their 20-something child had taken over as the car’s regular driver, and they’d failed to inform their insurer; or someone test-driving their car during a service crashed it, and their policy didn’t cover an incident if someone other than those “nominated” on the policy was behind the wheel at the time.
Or their car’s computer system had revealed that they’d been speeding, or they’d forgotten to take their newly acquired car to their insurer’s assessment centre to be checked out, as the Ts&Cs prescribed.
And then there’s the issue of driver use.
If your car is insured for personal use, allowing you to drive to and from your regular place of work only, would you be covered if you were involved in an accident on your way to a work-related conference?
If your policy has really strict terms, strictly applied, you might not be, as ridiculous as it seems.
One recent complainant said her insurer initially attempted to repudiate her claim for a stolen car on the grounds that she had been attending a business meeting at her local church when it was stolen from the parking lot.
She was able to prove that she was actually at an art lecture, so they found another reason not to pay her out.
Two “driver use”-related complaints handled by the Ombudsman for Short-Term Insurance reveal how unwavering some insurers can be on this issue.
In both cases, the complainants had personal use cover and were thus only covered while their cars were being used for personal use or while travelling to or from their main place of business.
One insurer rejected a crash claim because the insured driver was on his way to meet a friend for dinner to discuss a business proposition. It argued that because he was not using his car for personal use at the time of the accident he was not covered.
Because the policy wording in question allowed for that, the ombud’s office upheld the rejection.
In the second case, a work-from-home bookkeeper was delivering statements to a client when she was involved in an accident. Her insurer rejected her claim for the same reason. And again, the ombud’s office upheld the rejection because the policy wording backed up the insurer’s decision.
This is why it’s so critical to look way beyond premiums and excess amounts when comparing motor insurance policies — you need to dive deep and interrogate the bits that could trip you up at claim time.
My own policy says this on the subject of use: “Private use is for private or social purposes, including driving between your home and regular place of work. Business has additional cover where the vehicle forms an essential part of the performance of any work or function, such as estate agents, client liaison and delivering any commodity.”
Cars being driven for business reasons have more chance of being involved in an accident because they are on the road more often and in a greater variety of places, hence the higher premiums applied to “business use” policies.
The wording left me unsure if I’d be covered while driving to a work team-building event, or to the airport for a business trip. (Insurance assessors always investigate these things when faced with a hefty claim.)
So I made a call to my insurer and was assured that as long as I didn’t routinely use my car for business purposes I’d be covered if I happened to have an “insured event” while on an occasional work-related trip.
Yes, I could have argued that my car does not form “an essential part” of my work function if such a claim had been rejected, but having that conversation on record gives me peace of mind.
You have been warned. Take a long, hard look at the "Use" section of your policy and act accordingly to make sure you’re not potentially wasting your monthly premium payment.
Many people who have insured their cars for personal use, believing that to be correct as they are not sales reps and the like, would have their claims repudiated if the car was stolen from a hotel while they were attending a work conference, for example, or while they were fetching a consultant from the airport as a favour for their boss.
They have no idea that their premium payments are giving them false comfort. Such thoughts keep me up at night.
Some personal motor policies do provide wriggle room:
Christelle Colman, CEO of Ami Underwriting Managers, said her policy wording was: “Domestic Use: Domestic purposes relating to vehicles means you may use it for social and private travel, travel to and from work, as well as travel for business or occupational purposes once a week. If more than once a week, it cannot be covered under domestic use.”
Now that’s really clear, fair and tailored to many people’s lived experience.
Senior assistant ombud Thasnim Dawood said whether you have any wriggle room on what your insurer considers to be personal or domestic use depends entirely on the wording of your policy.
Insurers or brokers are compelled to properly disclose those terms and conditions and their implications to consumers at the time the policy is taken out, she said. Similarly, consumers must be totally honest about their vehicle use.
Each complaint about a personal motor claim rejection was dealt with on its own set of facts, Dawood said, “and might allow us to invoke our equity jurisdiction in deciding on the matter”.
In other words, to go beyond the technicalities of policy wording and make a decision based on fairness.
“While it would be ideal for the insurer to allow the odd business trip on a private use policy, it is the insurer’s prerogative as to the type of risks which it will accept, in line with its underwriting criteria,” she said.
You have been warned. Take a long, hard look at the “Use” section of your policy and act accordingly to make sure you’re not potentially wasting your monthly premium payment.
