Short-term insurer Mutual & Federal says it will include the new CO2 Emissions Tax (carbon tax) in the settlement of total loss claims on new motor vehicles, provided you have insured your vehicle for the appropriate value.
“The move means drivers won’t have to dig deep for additional funds to cover the tax , which could be upwards of R20 000 for large cars, if their vehicles are written off or stolen,” the insurer says.
Several of its products, it adds, provide for full replacement value of passenger and light commercial vehicles if they are less than a year old and have fewer than 30 000km on the clock.
“In view of the above, if their vehicles are less than 12 months old, it’s up to policyholders to ensure that the value of the tax is included in the value specified for insurance purposes,” Wayne Richards, Group Manager: Underwriting and Product Solutions says.
According to Richards, the Auto Dealers Guide, compiled by TransUnion and used by the insurance industry to establish the value of vehicles, will ultimately incorporate this tax in the reflected values of newer vehicles in much the same way that they include VAT.
“The values in the publication will soon be inclusive of tax, with no indication of what portion of the total value is made up of the new tax,” he says.
The CO2 Emissions Tax came into effect on 1 September 2010 for all passenger vehicles, and is set to kick in on 1 March 2011 for light commercial vehicles, excluding taxis, ambulances, hearses and other vehicles used for transportation of goods.
A government imposed levy on vehicles that emit CO2, has been set at R75 per gram per kilometre (/g/km) in excess of 120g/km for passenger vehicles and R100/g/km in excess of 175g/km for light commercial vehicles that emit CO2.
At present, the tax is only applicable to new vehicles. Carbon tax on a vehicle worth around R150 000 varies from about R750 to R2 000, depending on the amount of carbon emitted, while purchasers of high-end 4×4 petrol vehicles should prepare to pay as much as R25 000. “In terms of the provisions of motor insurance, the maximum amount payable for total loss events (theft or write-offs) is restricted to the amount stated in the policy schedule,” Richards says.
The onus is on the insured and brokers to ensure that the limit of indemnity of new vehicles purchased after 1 September is adequate, and that it includes provision for the CO2 Emissions Tax, accessories, and (if applicable) provision for credit shortfall. – I-Net Bridge
It is to be expected that more insurers will follow the example of including provision for CO2 tax in policies. It will be up to every client to communicate with his insurer at the time of insuring his new vehicle and to decide whether this is a risk he might like to be covered for.