Check your policy before - not after - something goes wrong

It’s always been a non-negotiable spend for me, albeit a grudge one at times. What’s proved to be stronger than parental influence, though, is the contents of my inbox in my past two decades as a consumer journalist.

People generally write to me when things have gone wrong; they’ve been sold a dud car; they’ve been a victim of bank fraud; they paid for something but never got it; or the insurance policy they were relying on to spare them financial ruin failed them at claim time. I get lots of the latter, especially rejected motor claims.

The main reasons include the regular driver of the car not being the regular driver listed on the policy; no tracking device fitted when this was stipulated by the policy’s terms and conditions, and failure to disclose a material fact when the policy was taken out.

Saveshan of Durban’s e-mail covered two of those three scenarios. The subject line of his email was “Harassment by lawyers and Xbank”. And there was a letter from the bank which financed his car, dated August 1, demanding R155,000 from him in arrear payments on his stolen car.

This is a very large sum for a young man, especially an unemployed one. Responding to the bank, Saveshan wrote the following and copied to me: “You guys are phoning me and harassing me and then cutting the call, I refuse to have anything further to do with this.

“I have explained many times that the car has been stolen and I have been unemployed since last year. Your company is continually phoning me and has been very rude and aggressive; is this how XBank does business; they hire gangsters to intimidate clients? Kindly note calls are also recorded on my end.

“My car was insured and the insurer refused to pay because there was no ‘tracker’ installed, as I was under the impression I am paying a premium that caters for no ‘tracker’.”

Now, I’ve taken up cases, several of them, where the recording of the call in which the consumer took out their car insurance policy either made no mention of the importance of a tracking device being installed, or underplayed it.

And as a result of my intervention, the decision to reject the claim was reviewed and the person got their payout.

My first said was that what may have happened to Saveshan as well, so I asked about that call, and whether he’d received a recording or transcript of it. In response he sent me a transcript of that call. With his mother.

“My mum’s name is on this [insurance policy],” Saveshan told me. “Nothing was ever communicated to me. “But the car was in my name.”

And still is, hence Saveshan is getting those harassing calls from the bank and its attorneys. In that call with his mother, the insurance agent repeatedly warned that if a tracking device was not fitted to the car in question within seven days, with proof supplied to the insurer, a claim for theft or hijacking of the car would be rejected.

“Yes, I’m going to [get a tracking device fitted],” she said. But clearly she did not. So on those grounds, there was no defence and the claim for that stolen car was justifiably rejected. But it got worse. Asked why the insurer had that conversation with Saveshan’s mother, and not him, he dropped the bombshell: “The insurance was in her name — she added me as a dependent on the car, because my premiums were too high on my name.”

So never mind the lack of tracking device, the fact that the insurer was led to believe that Saveshan’s lower-risk mother was the main driver of the car, and not Saveshan, is grounds for rejection of the claim.

Insurance premiums are linked to risk. The higher the risk, the higher the premium. Middle-aged women are statistically lowest risk drivers, hence they get the lowest premiums.

And that’s why many parents opt to insure their children’s cars in their names But it’ sa foolish decision. tendency, Insurers know so when all about there ’this s a claim, they investigate and find out that the regular driver is actually the offspring, and the parent then gets a letter from the insurer saying they were misled about the risk, claim rejected, policy cancelled and the parent gets noted as a “moral risk”, which inevitably proves to be expensive in terms of premiums.

I tried to break the news to Saveshan as gently as I could. And that had nothing to do with the bank, hence the bank is fully entitled to demand that R155,000 from him for a car he no longer has.

And with no income at the moment, thus no means of paying, that sum is going to escalate, with interest and costs. It is not going to end well, sadly.

“Thank you, ma’am, I really appreciate your efforts,” he responded. “It’s the first time someone at least took the effort to find out what really happened.”

And the sad truth is that many others are paying premiums on insurance policies in the belief that they are covered, when in fact any claim will be rejected because a risk-related issue they will only find out about when that bad thing happens. If you’ve moved, started using your car for business purposes, given your car to your son or daughter to drive or forgot to get that tracking device installed, please contact your insurer and fix that problem. Right now. Your future claims depend on it.

GET IN TOUCH: Contact Wendy Knowler for advice with your consumer issues via e-mail at consumer@knowler.co.za or on Twitter @wendyknowler.