Comprehensive Car Insurance - What you need to know

Many people purchase vehicle insurance with the misconception that their insurance policy will pay out claims irrespective of the circumstances surrounding the claims. These people are then disillusioned when the need arises to claim and their claims are repudiated. Insurance companies can only repudiate a claim in accordance with the policy agreement as the policy document is a legal document and binding on both parties, namely the insured and the insurer. Before purchasing any insurance it is recommended that you study the policy document and make sure that you understand not only the cover granted by the policy, but also the specified exclusions.

A comprehensive car insurance policy states that it will compensate you if your vehicle is damaged or stolen. There are however certain provisions that must be met before the company becomes liable to you as the insured. The damage must have been caused by an insured peril. Certain risks are covered as optional additional cover and you need to determine which risks are excluded from the standard car policy offered by the insurance company.

The following are just a few examples of common misconceptions about comprehensive car insurance policies.

As there are very large areas in South Africa with a low risk of sustaining hail damage to their vehicles this may be a risk that is excluded on their standard car policy, but could be included as an insured peril at an additional premium. If you are in a high risk area where regular thunder- and hail-storms are experienced, it is advisable to determine whether your insurance policy includes hail as an insured peril and if not what the additional premium would be to obtain this cover. Do not just presume that you have cover for hail damage.

Sound systems and canopies of pick-ups are often items that are overlooked when purchasing insurance and the insured may be under the impression that these items are automatically insured. These items do however carry higher risks and although they are insurable these usually need to be specified on the policy and premiums will be calculated to include damage or theft of these items. When requesting a quotation for car insurance remember to specify the make, model and value of your sound system so that this can be included on your policy. Failing to do so, the insurance will not be liable to replace your system in the event of a claim.

The same applies to canopies - if the insurance company is unaware of the fact that you have a canopy on your pick-up and has not charged you a premium to cover the additional costs associated with a canopy you will not be compensated for the canopy in the event of a claim.

No insurance company will pay out a claim if the driver of the vehicle is not in possession of a valid driver's license or the driver's license is endorsed for reckless and negligent driving or drunken driving. This endorsement does not have to be reflected on your license - if your license is endorsed with the Authorities the insurance company will repudiate your claim.

If your license is endorsed for the above-mentioned offences after purchasing insurance it is recommended that you no longer drive your own vehicle and that you notify the insurance company of the offence and furnish them with the particulars of the nominated driver of the vehicle. Irrespective of whether you were at fault or not, an insurance company has the right to repudiate your claim if you are the driver at the time of the accident and your license is endorsed.

If the driver of the vehicle drives while under the influence of alcohol or drugs, or while the percentage of alcohol in the driver's blood exceeds the legal limit or when the driver fails a breathalyser test, the insurance company will repudiate your claim.

The onus is on the insured to minimise the risk of an accident and therefore must ensure that the insured vehicle is roadworthy at all times. If the vehicle, caravan or trailer specified under a car policy is involved in an accident and is found not to be in a roadworthy condition as defined in the legislation relating to roadworthiness the insurance company has the right, which in most cases it will exercise, to repudiate the claim in its entirety. This means that damage caused to third party property will be for your own account as well as damage to your own vehicle.

If you fail to lay a criminal charge against a person who has used your vehicle without your consent and a claim arises as a direct result of this person's use of the vehicle your claim for damages will be repudiated. In other words if your son uses your vehicle to visit a night club, without your consent to use the vehicle, and drives while under the influence and causes an accident, you will not be able to claim from your insurance policy unless you have laid a charge of theft against your son. This charge may not be withdrawn.

Costs for towing and storage may be subject to specific procedures being followed at the time of an accident. Most insurance companies have preferred suppliers of these services and require their clients to only make use of these selected tow-in companies. Failure to do so may result in the client having to bear the costs of these services. It is recommended that all policyholders understand what the insurance company's requirements are in the event of an accident.

Vehicles used to earn an income are excluded from a personal car insurance policy. If it is discovered that a car that was insured for personal use is in fact being used primarily for business purposes than the insurance company will not pay out a claim on this vehicle.

Using your vehicle to travel in countries other than South Africa could place yourself in a position where you have no insurance cover. There are certain countries outside South Africa which are excluded under most insurance policies and third party compensation is often limited to within the borders of South Africa. Before driving to other countries it is recommended that you determine whether your insurance cover extends to these countries. If not find out whether insurance is available that will cover your vehicle in the applicable countries.

As can be seen comprehensive car insurance has its limits and the onus is on the insured to determine what circumstances could give rise to the repudiation of a claim.