The “Carprehensive” policy, which is underwritten by Rand Merchant Bank (RMB) Structured Insurance and is currently being extensively marketed on television and in other media, has come under fire from the short-term insurance ombudsman, Brian Martin, for “offering little protection to consumers”.
Martin says you need to note:
* You can make a claim only if your vehicle is written off in an accident or is not recovered after a theft or hijacking. This means you have no cover in an accident where your car is not a write-off. If your vehicle is stolen in a theft or hijacking, your benefit is payable only after 30 days.
* Your third-party cover (for example, if you drive into another car and that driver claims damages from you) is applicable only if the claim is between R50 000 and R250 000. This excludes any bodily injury to a third party.
* Your insurance cover starts only after you have made three consecutive insurance payments. This means that you have no cover for the first two months of the policy, despite having to pay premiums during this time. If you require immediate cover, you have to pay two months’ premiums upfront.
* You have no cover if your car is directly or indirectly damaged as a result of fire, flood or seismic activity or if your car is more than 15 years old;
* If you make a claim, the insurer can request you or any witness or passenger to undergo a polygraph or stress voice analysis or similar test. This goes against the provisions of the policyholder protection rules (PPR), which are regulations published under the Long Term and Short Term Insurance Acts to protect you, the consumer.
* Martin says the policy is also subject to a number of “unusual exclusions”, such as driving off-road and exceeding the speed limit (whether intentional or not). “The exclusions are of such a nature as to render the cover applicable almost valueless … while it is possible to be the victim of another person’s negligence, which may be the sole cause of the accident, in the vast majority of cases an apportionment of liability will be applicable and, in such cases, the Carprehensive policy will not provide you with any cover,” he says.
A traditional comprehensive car insurance policy covers you for:
* Damage to your own car;
* Damage to the property of others (third parties) who may suffer damage as a result of your wrongful conduct; and
* Claims for bodily injuries sustained by passengers in your car.
A traditional comprehensive car insurance policy also gives you cover from the time the policy starts and covers you against the consequences of your own negligence or wrongful conduct – although you are not covered if you are guilty of recklessness.
Gustavo Arroyo, the chief executive of RMB Structured Insurance, says it is not unusual to have a waiting period of 30 days to pay out a theft or hijacking benefit because stolen or hijacked cars are often recovered in under 30 days. He also says paying two months’ premiums upfront for immediate cover eliminates the need for an excess to be paid at the claims stage.
“The PPR provide that where a policyholder voluntarily undergoes a lie detector test, failure to pass such a test may not invalidate a claim. Our policy merely says that such a test may be requested. In terms of the PPR, it is permissible to request that a policyholder voluntarily undergoes such a test where, for example, there are identified uncertainties and inconsistencies,” Arroyo says.
Arroyo says Carprehensive is designed for motorists who are completely uninsured, with premiums set at a third of traditional comprehensive policy premiums. “Naturally, policy benefits were tailored to provide meaningful cover within this range,” he says.
Martin’s advice is that if you cannot afford traditional comprehensive car insurance you should consider taking out balance of third party, fire and theft cover or third-party cover only. He says the average price for balance of third party, fire and theft cover is about R220 a month and the average price for third-party cover only is about R60 a month.