Fortunately for many vehicle owners the car insurers do not drive with them before issuing a car insurance policy. All that the car insurers have available to them is information as to driving experience, previous accident record and insight with regards to traffic violations. Much of these have to be disclosed by the vehicle owner and there is no measure of “Are you a good driver?”

We would like to reflect on the above question by referring to a decision from the Ombudsman. The question presented to the Ombudsman was whether the lack of due care – i.e. the failure to prevent the vehicle accident claim on account of poor driving – would justify the decision to reject the car insurance claim….

Onus on insurer to prove lack of due care

The Insured obtained her Driver’s Licence on 22nd July 2004 and eleven months later, i.e. on 17th June 2005 and at 08h00, she was on her way to work. Her inexperience in driving was manifested in that she drove too closely behind a truck, which in her words, “stopped abruptly” and to avoid a collision with the back of the truck, she decided to enter the intersection and collided with a vehicle travelling in the opposite direction which was turning right.

When the Insured entered the intersection, the traffic light had already turned red against her. The Insurer rejected the claim on the ground that the Insured failed to exercise due care and the action taken was in their view grossly negligent.

Ombudsman’s reponse

The Ombudsman referred the Insurer to the well-known case of Santam Limited versus CC Designing CC 1994 SA 199, and in the unreported judgement of Stax Masango and Lloyd’s of London, where it is stated that the onus is on the Insurer to prove that the Insured’s “conduct was such that the one would conclude that he recognised the dangers to which he was exposed and deliberately courted them by taking measures, which he himself knew were inadequate to avert them or about the adequacy of which he simply did not care, in the knowledge that he was insured”.

Under threat of a ruling the claim was settled.

[Source: Ombudsman's Briefcase Issue No. 02/2006]

Your car insurance claim would as a result not be fairly rejected simply because you are a bad driver. This will however have a significant effect on your car insurance premium if you are involved in several vehicle accidents. Not only will your premium increase sharply – but the car insurer could decide not to provide a specific high risk driver with car insurance cover!!

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I bought my VW Polo 5 years ago and travel often between Bloemfontein and Johannesburg on business. I believe these business travels makes be a bit of an “above average” driver when considering driving experience.

The driving distances travelled by my mom in Oudtshoorn however makes for far more interesting reading. She travels in 2 vehicles – a 2007 VW Jetta and a 1978 VW Beatle. When my dad passed away in March 2007 he left her with the VW Jetta which had only 300km on the clock. Today this Jetta has travelled just more than 11,000km’s.

The reduced travelling my mom does is even better reflected with the VW Beatle. This vehicle is in immaculate shape and has just over 70,000 km’s on the clock despite having been driven for 32 years!

How does reduced travelling affect car Insurance?

Neither the VW Jetta or VW Beatle described above have been in an accident, and are much less likely to be in an accident than my VW Polo [which has been in an accident].

Reduced driving equates to reduced exposure to risks on the road. Reduced exposure to risks on the road should result in a reduced risk of accident claims – and this should be reflected in your car insurance premium!

It is always important to consider all the contributing factors to the premium payable under the car insurance policy – and driving distance is definitely one of these!

In the scenario described above the savings might not be as significant as my mom is now 70years old and her age will be a factor adding upward pressure on the car insurance premium. Had she however considered a Pay As You Drive car insurance 10 years ago – she might have saved a significant amount on her car insurance premium!!

Conclusion and Advice

It is important that we are aware of the factors that affect our car insurance premiums and that we reflect on them from time to time. Not only may significant life changes affect how much we drive but also how exposed we are to health and other risks.

We should not complain about rising car insurance premiums if we do not investigate the possibility that there might be car insurance product that better meet our needs and are more affordable. Pay As You Drive Car Insurance is one of these products that you need to consider and compare with your existing car insurance – especially if you believe you travel less than the average driver on our roads!!

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This will provide much needed protection to millions of vehicle owners who are driving on our roads alongside other uninsured vehicles. At present there is a 2 out of three chance that the vehicle owner of the vehicle that collides with you might have no car insurance!!

It remains however to be seen how this compulsory car insurance will be implemented and administered – and this might best be done in consultation with leaders and expertise from the car insurance industry.

This topic also was discussed on the IOL website and we would like to share this discussion:

While compulsory third party motor insurance is vital for SA, it is important that the scheme is properly managed, CIB Insurance Solutions said on Tuesday.

“Any potential problems are likely to depend on the exact structure that the compulsory third party motor insurance scheme takes,” it said in a statement.

While some teething problems were expected, it was important that for the long-term sustainability of such a scheme, it should not become an additional financial burden to the taxpayer.

Actuarial and risk services director Wilhelm von La Chevallerie said the administration and funding of compulsory third party motor insurance could become the responsibility of the local insurance industry, rather than being similar to the Road Accident Fund.

Should the insurance industry carry the risk and administer this cover, policyholders might be exposed to opportunistic underwriting and premium fluctuations.

“We do expect, however, that once the scheme is up and running and any issues have been ironed out that the consumer should be better off in the long-term,” Von La Chevallerie said.

Whatever structure the compulsory insurance scheme — currently under review by government — eventually took, it was a crucial development for South Africa’s motor insurance industry.

The SA Insurance Association (SAIA) earlier this year suggested that only between 30 percent and 35 percent of vehicles on South African roads were insured, meaning that of the 9.5 million registered vehicles, only 2.85 million were insured.

“Higher traffic volumes coupled with an increasing number of unroadworthy and uninsured vehicles, and a road-network that is under increasing pressure, means insured motorists in South Africa have been exposed to an increased risk and escalating costs,” Von La Chevallerie said.

An increasing proportion of accidents involved uninsured vehicles, resulting in lower recoveries and higher tracing expenses on the part of the insurer.

“Ultimately this leads to higher claims costs being borne by the insurers, which in turn puts pressure on loss-ratios and ends up in higher premiums for consumers.”

Von La Chevallerie said the success of a compulsory third party motor insurance scheme would ultimately depend on the policing of vehicles and control of potential corruption of administration schemes.

“It remains in the government’s best interest to ensure that the insurance industry as a whole is sustainable, including motor insurance and effectively managed, compulsory insurance should do just that.” [Sapa]

On the Car Insurance Blog we will keep our visitors updated on the progress with regards to compulsory third party car insurance. We believe that this will not only protect the financial interests of vehicle owners- but also provide a better insight and understanding of the costs of vehicle accidents- and lead to improved safety on the road!!

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Will we see compulsory car insurance in South Africa?

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Once an accident has occurred it is often a race against time to protect the lives of the accident victims. This first hour or “golden hour” after an accident is most important – and we would like to advise vehicle owners on sharing the correct information in their emergency calls!

What do we need to know about making that emergency call?

There is always the question of why call takers in the emergency service industry ask so many questions; and when do they actually dispatch emergency resources to the scene of an accident or other emergency.

When you are faced with a medical emergency and require realhelprealfast you can phone 084 124 on 084 124 for fast and efficient emergency response.

When you place a call through to the ER24 24/7 Contact Centre, an automated voice response will greet you and identify the line as ER24 Emergency Services, this takes about five seconds.

The first available emergency call taker will then answer your call and request certain details of the incident in order to dispatch the correct resources to the scene.

The following information is essential for fast and effective emergency resource management:

* Identify yourself and provide a call back number
* Clearly state the nature of the emergency and how many people were involved.
* Provide an address of the incident:
* What is the name of the road where this incident took place?
* What is the building name or number where this incident took place?
* What is the closest cross road?
* What is the suburb?
* What is the province?

Callers should keep in mind that we are a national Contact Centre and therefore require the province and suburb names in order to clearly map the incident.
ER24’s Immediate Dispatch system is able to dispatch vehicles to the incident whilst the call taker is still on the line. Thus the call taker can keep on talking to the caller to reassure, calm or provide medical advice whilst an ambulance is already en route to the incident.

[Information provided by ER24]

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The younger male drivers are perceived to be the greatest risks to road accidents and car insurance claims, hence the more expensive car insurance premiums they have to pay!

It is however often difficult to find factual evidence of these risks. This is why the 2009 RTMC Crash Report makes such interesting reading. The Road Traffic Management Corporation compiles this report from all the fatal crash statistics gathered by the various police stations in South Africa.

It is most important to remember that this Report is a Fatal Crash Report – and reports on accidents where there have been road deaths. This will not reveal all the minor fender bender accidents which might also have resulted in car insurance claims – but focuses on fatal accidents.

2009 Crash report: Fatalities per Age Group and Gender

The percentage of fatalities per age group and gender for the year 2009 (only for the cases where this information is available) are reflected in the graph below.

The above information shows that in the order of 76,20% fatalities during 2009 were male and 23,80% females. 92,54% of all drivers killed in crashes were male and 7,46% female.

It is alarming to find that so many more fatalities are that of male drivers and passengers. This strongly supports the argument by car insurers that younger male drivers are more irresponsible – and their female counterparts are much safer drivers!

This is also strong report for the finding referred to in an earlier blog post that there are significant differences in the accidents caused by male and female drivers!!

Also view:

2009 Fatal Crash Report for South Africa

Young Drivers and Car Insurance

Female Drivers and Car Insurance

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“To allow manufacturers and importers sufficient time to test and determine the CO² vehicle emissions of all double cabs, the tax on double cabs will only be applied from March 1, 2011,” it said in a statement.

The decision followed a meeting between Finance Minister Pravin Gordhan on August 19 and CEOs of the seven motor vehicle manufacturers in South Africa, as well as a delegation from Business Unity SA.

“One of the industry’s concerns about the inclusion of light commercial vehicles was based on the fact that reliable data on CO² emissions by light commercial vehicles (including double cabs) was not available, and that there was no internationally applied test method to measure the emissions of light commercial vehicles.”

The treasury said that the National Regulator for Compulsory Specifications (NRCS) had, however, confirmed that its testing facility in East London measured CO² emissions for all vehicles tested there, including light commercial vehicles.

The industry responded that not all vehicles were tested at the NRCS facility.

The CO² emissions tax on passenger vehicles will come into effect next Wednesday.

The meeting also agreed on the need to expedite the availability of cleaner fuels in South Africa.

“Emerging economies such as China, Brazil and India have made significant progress with the introduction of cleaner fuels, which are especially necessary to help improve local air quality.”

The treasury said although cleaner fuels did not directly reduce CO² emissions, the need for cleaner fuels to improve fuel efficiency was important.

The meeting further agreed that industry and the treasury would encourage motor dealers to show the CO² vehicle emissions tax separately on invoices.

“Environmental taxes are based on ‘the polluter pays’ principle and they seek to influence and change behaviour. Transparency of the tax to the polluter is therefore important.”

[Sapa and Fin24.com]

Also view:

CO2 Vehicle Emissions Tax, Double Cabs and Car Insurance

How much is carbon emissions tax going to cost vehicle owners?

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Question/ Enquiry

We would like to share the email received:

“Seems that car thieves have found yet another way to steal your car or truck without any effort at all. The car thieves peer through the windshield of your car or truck, write down the VIN # from the label on the dash, go to the local car dealership and request a duplicate key based on the VIN#.

I didn’t believe it, so I called a friend at BMW Hatfield in Pretoria and pretended I had lost my keys. They told me to just bring in the VIN #, and they would cut me one on the spot, and I could order the keyless device if I wanted.

The Car Dealer’s Parts Department will make a duplicate key from the VIN #, and collect payment from the thief, who will return to your car. He doesn’t have to break in, do any damage to the vehicle, or draw attention to himself. All he has to do is walk up to your car, insert the key, and off he goes to a local Chop Shop with your vehicle.

You don’t believe it? It IS that easy. To avoid this from happening to you, simply put some tape (electrical tape, duct tape or medical tape) across the VIN Metal Label located inside the windshield on the dash board. By law, you cannot remove the VIN, but you can cover it so it can’t be viewed through the windshield by a car thief. I urge you to forward this to your friends before some other car thief steals another car or truck. I slipped a 3 x 5 card over my car’s VIN #.”

Response

We referred this to one of our friends and driving specialist Rob –Handfield Jones, and are pleased to share his response as well!

“Ancient myth. Been circulating since at least 2005. Firstly, a BMW dealership can’t “cut a key on the spot” if they wanted to. It has to be done at the factory at Rosslyn from a profile stored on the BMW plant system which is very tightly guarded. Another tip off that this is a hoax is the line about “ordering the keyless device”. BMW has never ever sold remotes separate from keys in South Africa. From the very first time BMWs came with factory-fitted alarms / remote unlocking, the transmitter has been integrated with the key.

More to the point, dealerships insist on seeing proof of ownership of the vehicle (and proof that you are who you say you are) before ordering duplicate keys. I know – I’ve actually had to make a duplicate key for a BMW and it was a laborious process. The other motor manufacturers are the same. The importers are even tougher, because they have to have the keys made overseas and shipped in.

Trust me, you can’t just walk in off the street, quote a VIN # and get a key, and you never have been able to…
Cheers,
Rob

We would like to urge all vehicle owners to pay close attention to vehicle security and to share their experiences on the Car Insurance Blog.

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What is a VIN number and why is this important for car insurance?

Vehicle Security and Car Insurance

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Many visitors to the car insurance blog have enquired about accidents caused by drunk driving – and asked the question whether car insurance companies will settle these claims.

The truth is that a car insurance claim will not be settled if there is proof that the driver has been drunk.

A car insurance policyholder should be aware that he is obliged under the car insurance policy to operate the vehicle within the Rules of the Road. If he does not obey the Rules of the Road, he will be in breach of his part of the agreement under the car insurance policy – and cannot expect the insurer to settle the claim.

Unfortunately it is also true that we do not have enough testing for drunken driving – and most accidents that are not serious do not result in testing for breath and blood. Too many accident claims are made “the morning after” – and will never involve disclosure of whether the driver had a few drinks.

Even though this will amount to car insurance fraud, many vehicle owners get away with these claims, receive payment from the car insurers and continue with their irresponsible behaviour. The effects of these claims are felt by other vehicle owners who are threatened by sharp rising car insurance premiums!!

We would like to urge vehicle owners and road users to drive responsibly – and to perform self-testing! Buy yourself a breathalyzer to keep in your vehicle and to test whether you are driving within the limits!!

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Many families were left without a beloved child when a train crashed into a minibus in Cape Town earlier today!

Preliminary investigations into the accident that killed nine schoolchildren in Blackheath, just outside Cape Town on Wednesday morning indicate that the driver of the minibus they were travelling in tried to cross the train tracks while the boom was down, say police.

We would like to urge all our road users to pay attention to safe driving near Level Crossings. [Photos provided by ER24]

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The new carbon emissions tax, due to come into effect from 1 September 2010. This tax will be levied on the purchase price of any new car sold on or after the above date, at a rate of R75 per gram of CO2 emitted per kilometre, over and above 120 g/km of CO2 emitted.

A very important component of car insurance is the vehicle that you drive – and perhaps more important the value of that vehicle – or the cost of the vehicle as an insurable interest!

When we are searching for cheaper car insurance – we should keep in mind that the value of the vehicle plays an important role in calculating the car insurance premium. The more expensive to replace and repair that vehicle  – the more expensive the car insurance premium!!

So how will this CO2 emissions tax impact on the price of the vehicle to be insured?

I have come across an interesting story by Steven Jones on Moneyweb, and we would like to share some of his insights and especially the graphs quoted from Car Magazine. We would like to recognize as the source – CAR Magazine (August 2010 issue)

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