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Frequently Asked Questions
Q: What is the purpose of having an insurance
policy when many eventualities are either limited or
excluded?
A: The purpose of insurance is to put you back in
the same financial position you were prior to your
loss, however, if every eventuality was to be
catered for under an insurance policy it would
simply be unaffordable to purchase such cover. Hence
a policy of insurance caters for specific INSURED
EVENTS (detailed under each individual section of
your policy) together with the applicable
exclusions that apply to those insured
events. Those incidents which are catastrophic in
nature are generally covered as long as you meet the
policy provisions and take ample precautions in loss
prevention.
Q: How do I know what policy exclusions are
applicable to my policy?
A: Your policy wording is broken down into various sections. The first few pages often outline the ‘General’ exclusions and the remainder of the exclusions are reflected under each specific section that they apply to. Whilst we make every attempt to point out the most pertinent and prejudicial exclusions at the point of sale and again at the anniversary of a policy it is impossible to outline each and every one that exists under the policy. It is therefore crucial that you familiarise yourself with these specific exclusions (by way of reading your policy wording) so that you are not disappointed at claim stage. We invite you to call in at our offices or contact us should you require more information regarding your policy exclusions.
Q: What is an excess?
A: An excess is the first amount which you (the
Insured) have to pay towards any claim you submit to
an Insurer. Motor vehicle excesses are paid by you
directly to the panel beater on collection of your
repaired vehicle whilst for most other claims the
Insurer will deduct your excess from the
compensation amount prior to settlement. It is
important to note that not all excesses are the same
amount, they differ from policy to policy and some
policies allow for the excess to be ‘bought back’ or
‘waived’. This is at an additional cost determined
by the Insurer. It is also known as an ‘excess
buy-back’ or ‘excess buster’.
Q: Why do I have to pay an excess even when the
claim I am submitting is not due to any fault of my
own?
A: Insurance premiums are on the most part
scientifically calculated, taking into account
numerous statistical data. Incorporated into the
calculations is the ‘claims cost reduction’ that
results out of excesses being payable at claim
stage. Premiums would be much higher in the absence
of the first amount payable and this is evidenced by
the fact that a client who opts for the excess to be
waived/deleted, pays a higher premium than a client
who does not. Whether or not an incident which
results in a claim is your fault, the first amount
payable is still due by you to the Insurer
regardless of who is to blame. Most Insurers do
however commit to making every possible attempt to
recover your excess from the liable third party
(provided they are found to be lawfully liable) IF
it is economically viable to do so.
Q: To what extent will an Insurer go to in
recovering my excess?
A: A successful recovery is dependent upon many
variables. The recovery process is not limited to
‘getting back your excess’ it is also instituted by
the Insurer in their own best interests to recover
the loss, in full, should the third party be found
to be legally liable for loss/damage to insured
property. The recovery process therefore serves to
recoup the full claims cost where
possible so as to protect your claims free group or
no claims bonus (NCB) and by so-doing reduce the
premium increase that follows as a result of a
claim.
Q: Why is it important to maintain a healthy claims
loss ratio?
A: The intention of any Organisation is to make a
profit for their Shareholders and Insurance
Companies are no different. Keeping claims costs as
low as possible is the aim of any successful Insurer
as this translates into higher profit margins for
the Insurer and more affordable premiums for the
Policyholder.
Q: Do I have to claim from my own policy when the
other person was to blame?
A: Whilst you are within your legal right to claim
directly from the Third Party, it is advisable to
turn to your own insurance policy for cover. There
are a number of reasons for this, including but not
limited to the fact that when you approach the Third
Party directly, we as your Broker cannot assist you
with such claim and your Insurer is absolved of
their duties to ensure fair and accurate settlement
to you. Should for example the repairs done to your
motor vehicle be sub-standard, you will, in your
private capacity, without any assistance from your
Insurer, be responsible for the legal costs and
implications which may result. The most common
reason why people opt to approach the Third Party
directly is so that they do not have to pay the
excess which is due on their own policy. Experience
has indicated that it is better to turn to your own
policy for cover and allow the Insurer to pursue any
necessary recovery or conduct any legal proceedings
on your behalf.
Q: How long does the recovery process take?
A: This is almost impossible to predict as there are
a number of deciding factors. It is important to
understand that the Recovery process follows only
once the damage to your own vehicle is authorised by
an assessor. The success rate as well as the time
taken to recover depends on numerous factors
including but not limited to how much Third Party
information is provided to the Insurer. If the
particulars of the driver as well as the owner
of the vehicle, their respective addresses, vehicle
details and insurance policy details are provided,
the recovery process will certainly be quicker than
if the Insurer must appoint a tracer to determine
and locate the Owner (bearing in mind that if a
summons needs to be issued, it needs to be issued in
the name of the OWNER of the vehicle). Failure to
provide accurate third party details will result in
unnecessary delays. Providing names and contact
details of witnesses makes for an even more solid
case. If the Third Party is insured and it is
established that they are clearly liable for your
damage, the respective Insurers will liaise with one
another and settle accordingly. While seemingly
straight-forward in this instance the recovery of
your excess can still take anywhere between 6 weeks
and 6 months. Sometimes it happens that both parties
are to some degree responsible for the accident. In
this instance there is an apportionment of blame
placed on both parties, which results in each
Insurer absorbing their portion of the cost. Should
this be the case, it is unlikely that your excess
will be paid back to you.
In instances where there is conflicting information
(Third Party refuses to accept liability) the
recovery process can take up to 5 years. In
instances where the Third Party is uninsured and is
of insufficient means, the Insurer holds the right
to abandon the recovery process as such a recovery
would not be economically viable to pursue. Your
excess will not be recovered in this instance.
Q: Should I accept a cash offer from the third
party?
A: It is not advisable to accept any offer made to
you by a third party whether it is to cover you
excess or for the full amount of the damage
incurred. Should you choose to accept any offer
made, you may seriously prejudice your Insurers
ability to make a full recovery. You should
definitely speak to your Broker before making any
decision in this regard.
Q: Should I make a cash offer to a third party when
I am responsible for the damage to their vehicle?
NO, you should not offer to pay monies over to a
third party in instances where you feel that you are
responsible for their damages. It is better to hand
the matter over to your Insurer so that the merits
of the case may be looked at in order to avoid the
legal implications that may arise out of accepting
liability yourself. Whilst you may think that you
are liable, the law may take a different view or
their may very well be an apportionment of blame
placed on both drivers.
Q: How are “loss ratio’s” calculated?
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In transferring his risk, Mr A pays a monthly premium of R100.00 to his Insurer.
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This equates to an annual premium of R1 200.00.
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During a 12 month cycle Mr A has several claims, the total of which amounts to R1 200.00.
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This means that for every R1 Mr A has contributed to the ‘premium pool’ he has received the same amount back out of the pool.
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Mr A’s claims loss ratio is therefore 100%.
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Whilst he has received back every cent he has paid to the Insurer, the Insurer has made no profit whatsoever.
By way of the same example:-
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Mr A submits claims to the value of R2 400 during the same 12 month cycle.
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In this instance for every R1 Mr A has paid over to the Insurer, the Insurer has paid back R2.
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Mr A’s loss ratio is 200%.
Mr A may feel he has made a ‘good return’ on his ‘investment’ (monthly premiums) however his “return” will be short-lived since it will be followed by the unavoidable corrective action which will happen in one or more of the following ways:
-
a premium increase;
-
amended terms (higher excesses);
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exclusions (certain covers may be withdrawn) and
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in some cases Insurer’s may cancel policies where it is impossible to recover from the losses.
It is important to note that should an Insurer give
notice of cancellation on a policy for any reason
whatsoever, such notice of cancellation will need to
be disclosed to any future Insurer as this is
regarded as “material” to the risk and the
consequence of this may very well render the Insured
‘undesirable’ and ‘uninsurable’. This can be
especially serious where for example a client has
vehicle finance as the onus lies with the client to
ensure that the Bank’s asset is secured by way of a
policy of insurance.
Q: If I travel outside the border of South Africa,
will my vehicle be covered?
A: Your policy will outline the territorial limits
that apply to it, either under the General Terms and
Conditions at the front of the policy wording Or
under the individual section. Not all policies cover
the same territorial limits, so it is important that
you check your policy wording to identify which
applies to you. When travelling within the specified
territorial limits, there are certain requirements
that apply:
Non-Financed Vehicle:
-
A ‘cross border’ letter from your Broker confirming that your vehicle is insured;
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Your original registration document
Financed Vehicle:
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A ‘cross border’ letter from your Broker confirming that your vehicle is insured which is to be forwarded to the Bank;
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A letter from the Bank permitting you to take your vehicle over the South African border once you have completed certain documentation.
When travelling within the territorial limits of
your policy, your policy covers you for your own
damage so it is necessary to buy Third Party
insurance cover at the border. Following loss/damage
to the insured vehicle, most policies place the onus
and cost on the insured to get the vehicle to the
border at which time full cover will resume.
Should you travel outside of the
specified territorial limits of your policy, there
will be NO COVER whatsoever.
Q: Can I insure a vehicle that I do not own under my
policy?
A: In order to insure any asset, it is necessary to
have an “insurable interest” in that asset. Simply
put, in order to insure any item of property, one
has to prove that a loss of such asset would result
in a financial loss to such person who is insuring
such asset. There must be some right to or legal
interest in such property. Insurers may consider a
written agreement between two parties as acceptable
proof of lega/financial interest.
Q: Can I insure a Company owned vehicle under my
personal/domestic insurance policy?
A: Yes, most Insurers will allow for this, provided
that the vehicle is not used for Commercial use
(carrying/delivering goods). Vehicles that are used
for commercial purposes should be insured under a
Commercial policy as there is greater risk exposure
and there is often a need to insure the goods that
are being carried.
Q: What is SASRIA cover?
A: SASRIA stands for South African Special Risk
Insurance Association. SASRIA was established in
1979 following the political unrest of 1976.
Q: What does SASRIA cover?
A: The cover provided under SASRIA is as follows:
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Accidental or deliberate damage to your property caused by any person or group taking part in a riot, strike, lock-out or civil commotion.
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Accidental or deliberate damage caused by a person or group committing any act which has a political, social or economic agenda, aim or purpose or is intended to protest against, influence or overthrow any sphere of the government or is intended to induce fear in the public mind.
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This includes any act taken by a lawfully constituted authority in controlling, preventing or suppressing any of the events referred to above.
Q: What doesn’t SASRIA cover?
A: The following are NOT covered by SASRIA:
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Loss or damage that is consequential or indirectly related to the events mentioned above.
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Loss or damage caused by or related to the stopping or deliberate slowing down of work.
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SASRIA does not cover you if your property is dispossessed or confiscated by any lawfully constituted authority.
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Loss or damage caused by looting or theft, unless it is caused by any of the events referred to above.
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Loss or damage caused by any act or threatened act of terrorism involving nuclear weapons or devices, or chemical or biological agents.
Q: How do I claim from SASRIA?
A: All events which result in a claim in terms of
SASRIA LIMITED must be reported to the South African
Police as soon as possible. We will forward your
claim to your Insurer, who will in turn forward it
on to SASRIA for consideration. As with any other
claim, we, as your Broker, will facilitate the
entire process.
Q: What is under-insurance?
A: Under-insurance occurs when you do not insure
your insurable items for their full
replacement value (on a NEW for OLD basis).
Replacement value is what it will cost you to
replace the items with similar items at the time of
the loss/damage, not the amount that you paid for
the items when you originally purchased them. If you
insure items below current replacement cost, the
Insurer will apply the Condition of Average
Clause to your claim, which pays out
proportionately based on the percentage that you are
found to be under-insured.
Q: How does the Condition of Average Clause work?
Just as you have to carry 50% of the ‘total loss’ so
will you have to bear the same proportion of the
‘partial loss’.
The ‘condition of Average’ applies to the buildings,
Contents and All Risks section
Q: How can I avoid being under-insured?
A: By conducting an annual Inventory on your assets
in your home you can prevent under-insurance (you
will find an Inventory Form under the FORMS Tab –
“Other Forms”). When evaluating your household
items, you should apply CURRENT replacement costs to
all items. Remember that household contents
insurance refers to all the possessions that are in
your home, , including but not limited to moveable
furniture, loose rugs and carpets, curtains, linen,
crockery, cutlery, clothing, jewellery, appliances,
audio visual equipment. An easy way to determine
what falls into this category is to imagine taking
the roof off your home and turning it upside down …
everything that falls out then constitutes your
household contents to be insured.
Remember, when you insure your assets you are not only insuring against burglary and theft, you are insuring against a number of unpredictable events including lightning, fire, storm, wind, water and flooding so any idea you may have of excluding items that you feel a burglar would not be able to or interested in taking, you should reconsider the additional perils (such as FIRE) which may occur.