Why policy terms and conditions can “bite you”
Your short-term insurance contract can often seem confusing and overwhelming. One of the most important decisions you will make as a short-term insurance client will be to spend some time (with the help of your broker, if necessary) going through all the terms and conditions of your policies to make sure you understand the “ins and outs” of your cover. You will then know exactly what you are and are not covered for and there is little to no chance of any “surprises” at claims stage.
Below, we will go through some of the policy terms and conditions that we at Eqstra Financial Services feel are very important for you to familiarise yourself with.
An excess is the amount you are liable for prior to the settlement of a claim under an insurance policy, “it is the agreed amount of money you pay the insurer as a contribution towards repairs or replacement” (Schyf, n.d.).
An excess amount is applicable to most short-term policies, and it is explicitly stated in all policy documents. You should read and understand this section of the policy carefully, so you don’t get a surprise when it comes to a claim. Some insurers also call this the “first amount payable”, which also describes what it means.
Subrogation/Transfer of Rights:
When you submit a claim, an insurer can act on your rights or obligations against other people to recover costs or to defend any claim they may have against you. An example may be if you are involved in an accident caused by someone else, we will automatically try to recover your excess and the money that we paid in settlement of your claim from this person.
When you have a motor insurance policy, you need to familiarise yourself with all the exclusions of the policy. Claims that are submitted for any risk that is excluded will not be entertained. Some of the more common exclusions on a short-term motor policy are as follows:
• War and public disorder
• Confiscated property
• Pollution or contamination
• Gradual causes
• Wear, tear and breakdown
• Breach of contract
• Selling your possessions
• Consequential loss
“This refers to insurance against a third party suing you in your personal capacity, for financial loss, physical injury or death” (EU Brokers, n.d.). We will pay all costs and expenses for which you and/or any passenger becomes legally liable to pay in respect of:
▪ Accidental death or bodily injury to other people; or
▪ Damage to their property, including legal costs and other expenses that we agree to in writing prior to the liability being incurred.
The maximum amount you can claim, as per our policy terms, per accident is R5 million or any other amount stated in the policy schedule and the accident must have been caused by or in connection with:
▪ your vehicle; or
▪ any vehicle being towed by your vehicle; or
▪ the loading and/or unloading of your vehicle
▪ a vehicle being driven by you, the regular driver, or any member of your household that you or they do not own or have not hired.
Wear and Tear:
Businesstech.co.za define wear and team as “where items have a life span and once that time has been reached, it breaks or no longer works effectively” (Business Tech, n.d.). This is not covered by the policy and is noted as an exclusion. Examples of the exclusions under this section of the Eqstra policy terms are as follows:
▪ Gradual deterioration, including rising damp wear and tear, rust, mildew or fading;
▪ Mechanical, electrical or electronic breakdown, defect or failure;
▪ Damage to consumable parts or parts with a limited lifespan;
▪ Damage recoverable under any maintenance or lease agreement;
▪ Cleaning, repairing, restoring or alteration;
▪ Computer viruses and similar destructive media.
This is in respect of the general upkeep of your vehicle. You are required to maintain your vehicle/s in a roadworthy condition, failure to do this may result in a claim being rejected. For example, your motor vehicle must be serviced as per the manufacturers service schedule.
This is where an incident has occurred, but the policy does not provide the cover for required for this event. For example, if you have not selected car hire to be included on your policy and you are involved in an accident any cost incurred for the hiring of a vehicle will be for your own account.
Before you take out insurance with us, you have a duty to tell us everything that you know, or could reasonably be expected to know, that is relevant to our decision to insure you. If you are not sure whether something is relevant with regards to the vehicles you want to insure, you should inform us anyway.
If you do not comply with your duty of disclosure or if you misrepresent or provide false information that is relevant to a policy, we may be entitled to:
▪ Reduce our liability for any claim and/or;
▪ Cancel the policy and/or;
▪ Refuse to pay a claim and/or;
▪ Void the policy or the section of the policy to which the failure applies from its beginning.
When you submit a claim, you have certain responsibilities which are listed below. In addition, you need to comply with reasonable instructions and requests we may issue in particular pertaining to and documentation required by any party pertaining to the claim. If you fail to meet these responsibilities, your claim may be rejected. The following are some of the responsibilities required:
▪ You need to report your claim to us as soon as possible, but not later than 31 days after any incident. This includes incidents for which you do not want to claim, but which may result in a claim in the future.
▪ The claim must always be reported to our call centre for service – (0861377872)
▪ You must give us all the information and documentation which we may ask for, within 31 days.
▪ You also need to report any accident or anything which is lost or stolen to the police as soon as possible and at least within 24 hours of the incident.
▪ You may only choose a towing operator or repairer of your choice once you have obtained our written agreement.
▪ You must make your vehicle available for our inspection. We reserve the right to invite, accept, adjust or decline estimates or to arrange (at our expense) for the removal of your vehicle to other repairers for quotation purposes.
▪ You need to take reasonably necessary steps to prevent or minimise loss, damage, injury or liability. If after the payment of a claim in respect of lost or stolen property, the property which is the subject matter of the claim, or any part thereof is located. You are required to render all assistance we require in the identification and
physical recovery of such property. In return we will reimburse your reasonable expenses in rendering such assistance. If You do not render assistance in terms of this condition when called upon to do so, you will immediately become liable to repay us all amounts paid in respect to the claim.
▪ You must not admit any fault, nor make any offer to settle, without our written agreement. You must allow us to enter your premises and take, keep possession and deal with any claimed property in any way we consider reasonable. You may not abandon any damaged property to us, whether we have taken possession of the property or not.
▪ You must allow us to use your name in any legal action against any other person to recover any amount settled or which we agree to settle, in respect of a claim under your policy.
▪ You must notify us of any other insurance that also provide cover, whether in whole or in part.
No insurable interest:
The interests of all parties must be noted on the policy for their respective rights and interests to be covered. If you do not have financial interest in the vehicle, you cannot insure it. For example, your friend’s car is registered in her name, but you are insuring it on your policy without notifying your insurer/broker of the fact that you are not the registered owner of the vehicle.
Your premiums must be paid in advance on the payment date agreed by us and at the start of each period for which you want cover. If the premiums are not paid on the due date, you have 15 days grace period during which we will automatically deduct the premium from the same account to ensure continuous cover. If the premium is not paid within the grace period, this policy shall be deemed to have been cancelled at midnight on the last day of the preceding period of insurance, unless you can show that failure to make payment was an error on the part of the bank or any other paying agent. If your premiums are paid monthly, the grace period will only apply from the second month of cover.
Your vehicle is covered in South Africa, Botswana, Lesotho, Malawi, Mozambique, Namibia, Swaziland, Zimbabwe.
If a claim is also covered by another policy, we will only compensate you for our pro- rata portion of any claim. This does not apply to personal accident cover.
Hire Purchase and Leasing Agreement
If to our knowledge, the vehicle is financed we must first pay the finance company after deduction of the excess/s, whose receipt shall be a full and final discharge to us in respect of such loss or damage.
Business Tech, n.d. News. [Online]
Available at: https://businesstech.co.za/news/trending/439113/10-things-to-check-to-make-sure-your-insurance-claim-goes-through/
[Accessed October 2020].
EU Brokers, n.d. Insurance broker. [Online]
Available at: https://www.facebook.com/eubrokers/posts/
[Accessed October 2020].
Schyf, M. V., n.d. Facebook. [Online]
Available at: https://es-la.facebook.com/eubrokers/posts/five-common-short-term-insurance-pitfallsunderinsurance-to-avoid-this-ensure-tha/794345400707737/
[Accessed October 2020].