Don’t wait until claim stage to learn your car policy details

Among other particulars of your motor insurance policy, you need to know from the outset what your car is insured for and what you must do if you are in an accident. Martin Hesse reports on three cases to come before the Ombudsman for Short-term Insurance

With motor vehicle insurance, to avoid a nasty surprise when you claim, you need to know how much you will be paid out if your insurance company decides to write off your vehicle. You also need to know the procedure your insurer requires you to follow in the event of an accident, because, if you don’t follow it, you could end up having to pay the towing and release costs out of your own pocket.

These issues are highlighted in a case study in the latest Ombudsman’s Briefcase, the quarterly newsletter from the office of Dennis Jooste, the Ombudsman for Shortterm Insurance.

Mr B lodged a claim for damage to his car following an accident. The car was assessed and deemed uneconomical to repair, or a write-off.

The insurer, New National Assurance Company, settled the claim, but Mr B disputed the settlement amount, saying it was not based on the actual retail value of the car at the date of loss. He asked the ombudsman to investigate the insurer’s calculation of the settlement amount, as well as a dispute over towing and release fees.

Mr B said that, according to the Auto Dealer’s Guide (the reference used by the insurance industry to establish cars’ retail values), the retail value of his vehicle at the date of loss was R78 400. The insurer had offered him R51 238.

The policy documents did not show the “correct” sum insured (the car was insured for R52 100), Mr B said, and this was because he had not completed the proposal form himself when he had taken out the policy. He said he should have been advised, when signing the proposal form, of the correct retail value of the car.

Mr B also questioned why the insurance company had not fully covered his towing and release fees, which amounted to R11 500.

He had not phoned the insurer’s emergency assist number, as he was required to do in terms of the policy. However, the operator of the tow truck that arrived at the accident scene said his company was affiliated with Mr B’s insurer.

Mr B said he had received a reference number from the tow-truck operator and requested that his insurer settle the towing and release fees in full (see “Be careful who tows your car”, above).

◆ Display a “Do not tow” sticker from the AA (if you are a member) or your insurance company on a window of your car. This is particularly useful if you are incapacitated in an accident. It will make sure that medics or police at the scene of the accident know to call your insurer.

◆ Immediately call your insurance company’s emergency number, if required, or other reliable sources for assistance. Having the right contact details in the car or on your cellphone will aid authorities if you

In its response, New National Assurance said it was liable only for the insured amount stated in the policy, and Mr B’s premiums had been based on that amount.

Regarding the towing and release fees, the insurer said the tow was not authorised, and Mr B had not used the emergency assist number, as the policy required him to do. The policy stipulated a R2 500 limit for towing costs, which the insurer had offered to pay.

The ombudsman found that, because Mr B had signed the proposal form when he took out the are unconscious, Visser says.

◆ Never feel obliged to choose the first tow-truck driver who arrives on the scene, and be aware that not every one of them has your best interests at heart, he says.

Make sure to use an operator you trust, such as those registered with the United Towing Association of South Africa or the South African Towing and Recovery Association. Using an unregistered operator could be very costly and even result in your car being stolen – the police have identified policy, he had accepted the information on the form as true and correct, and the insurer had settled the claim in accordance with its liability.

The ombudsman also agreed that the tow was unauthorised, and, because the insurer offered to contribute R2 500, the balance of the towing and release costs would be for Mr B’s account.

MOTORCYCLE CLAIM

In another case, an insurance company unsuccessfully relied on a clause related to night-time parking arrangements to repudiate a claim some operators as part of a scam to steal cars, Visser says. Even when the tow-truck company is reputable, you need to record all its details.

◆ If the accident is serious, and particularly if people have been injured or killed, do not allow the vehicle to be moved until authorised to do so by the police.

◆ Before your vehicle is towed away, take photographs of the accident and remove any valuable personal belongings from the car, Visser says. for a theft that occurred during the day.

Mr H’s motorcycle was stolen from his front garden. His insurance company, Centriq, repudiated his claim on the grounds that he had failed to comply with the policy conditions, which required that the motorcycle must be parked inside a building at night and that the building must be properly locked. It said there was a further risk, because pedestrians walked through the property and the fence had many holes. It said it would not have insured the vehicle if it had known that the motorcycle would be parked in the front garden of Mr H’s residence, where it was visible and unsecured.

However, Mr H stated in his claim that the loss had occurred not at night but during the day, and he had discovered the loss on his return home from work in the afternoon.

He said he normally used his motorcycle to commute to and from work, but that morning his girlfriend had offered to take him to work. The insurer did not contest Mr H’s version of events.

The ombudsman found that, if Mr H’s version of events was accepted by the insurer as correct, then the motorcycle was not normally left at home during the day.

Significantly, the insurer had not proved that Mr H had been required to disclose his daytime parking arrangements on the odd occasion, “as this would be impractical”, the ombudsman said. The conditions relating to the vehicle being inside a properly locked building applied only to night-time parking.

He asked Centriq to settle the claim, which it agreed to do.