We take out insurance to cover ourselves against unforeseen eventualities and, on occasion, we find that a claim is questioned or even rejected by an Insurer.
Insurance policies are contracts between the policyholder and the insurance company which place a responsibility on the policyholder to adhere to certain terms and conditions.
The following are the most common causes of vehicle insurance claims rejection:
No policy will respond to a claim if the premium is not paid in the prescribed period.
Motor insurers will not pay out if you were driving over the legal blood alcohol, 0.01ml, limit or have been tested positive for drugs. Other policies simply state “while under the influence” while others specify a limit. Some insurers will go further and reject a claim if the person you lend your car to is under the influence, even if you were not aware of the borrowers’ condition at the time of driving.
Some motor policies are written on a “named driver” basis. This means only persons named in the schedule are permitted to drive the vehicle. This restriction typically applies to high value and/or high-performance vehicles. If you are unsure, check with your broker or Insurer before allowing someone else to drive your vehicle.
While your policy may not restrict who may drive your vehicle, it is important that the regular driver is recorded correctly on the policy as this is one of the factors used to determine premium. If your 18-year-old son or daughter starts to drive your vehicle on a regular basis your Insurer needs to be informed.
Check the “use description” that applies to your vehicle carefully. Is it strictly private use or does it include travel to/from work or allow full business use? Insurers differ in their use descriptions and you may not have the cover that you think you have. For example, in some policy wordings, Private Use may include driving to and from work and attending the occasional meeting, but some wordings may not allow this. The idea here is to be able to get a sense of how often the vehicle will be driven. Example: Sales reps drive their vehicles most of the day so the chances of being involved in an accident are therefore higher, while an elderly pensioner will seldom drive in peak hour traffic or at night.
Your insurer won’t pay up if they find out that you do not have a valid driver’s license at the time of the accident. Insurers see you as contravening the law and insurance does not cover any illegal activity. Some insurers will go further and reject a claim if a person you lend your car to is unlicensed. Once again, this applies even if you were not aware of the fact.
Most insurance policies clearly state that you have to inform the police within 24 hours if you are involved in an accident or if your car has been stolen. This applies, irrelevant of the accident taking place on a public road or not.
If you are insuring a used car for the first time, some insurers may request a pre-inspection report to confirm the current condition of the vehicle. Failure to comply with this condition could result in a claim rejection.
Some insurers will not pay you out for theft of the vehicle if you have not installed the required security devices in your vehicle. For example, an insurer may call for an Early Warning Tracking System. If you only fit a passive tracking system, you could land up with a problem.
You need to inform your insurer whenever you modify your car in order to change its performance. They would need to know for example, when you have modified the engine or added a turbo as this may affect the premium that is charged. If you have installed a new sound system, mags or other accessories, these may not be covered unless you have notified your insurer.
There is no cover when you drive beyond the territorial limits stipulated in your policy. Most insurers cover you within the borders of South Africa and in immediate neighbouring countries although many insurers will exclude Mozambique. If you plan to drive out of the territorial limits of your policy, you need to have cover extended for where you are going. If you have an accident outside of South Africa, the cost of bringing the vehicle back to SA will largely be for your account.
If you decide to move to a new residence, it is very important that your insurer knows about your new location and parking arrangements. For example, moving from a locked garage to an open carport scenario. The changed circumstances can affect your risk profile and non-disclosure could lead to claim rejection.
These need to be noted on your policy as they need to be considered when determining the sum insured. Failure to include optional extras or accessories could result in them being excluded from a claim settlement.
Don’t expect too much sympathy from your Insurer when you slide into the back of the car in front only to find that your tyres are badly warn. Less than 1mm tread depth is considered unroadworthy.
Your policy schedule will contain the driver, class of use, overnight parking and security requirements. If any information that is recorded with the insurance company is not correct – don’t delay – get it corrected by calling our underwriters on 011 778 9300.
This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)