A car insurance policy is a mutual agreement concluded in good faith between a vehicle owner and a car insurance company. The most basic summary of such agreement would be to say that the insurer would provide insurance cover to the client in exchange for a monthly or yearly insurance premium. There is however much more to such an agreement – and we would like to provide a bit more detail with regards to the obligations on the side of policyholder/ insured client.
We would like to discuss this in an easy to understand approach by focussing on different segments of the relationship and breaking this down to the specific obligations.
Where do we find confirmation of these obligations?
Every car insurance policy should have has a section titled “Terms and Conditions”. This section should be the starting point to confirm your queries about your obligations. These terms will also reflect on specific clauses within the contract that stipulate what is to be expected from the insured client and when he is expected to meet his obligations!
We do not wish to discuss the specific clauses from the car insurance contract of a specific insurance company, but will rather discuss the general requirements to be found in these policies:
- Financial and Payment Obligations
This is the most obvious of obligations and constitutes your side of the financial agreement. Without payment of insurance premiums there will be no cover. You must pay the premium when asked for it. Payment must be available in full as required under the agreement and at the time stipulated in the agreement.
- Duties to making disclosures
The nature of the contract of “good faith” requires the client to make a complete and honest disclosure of all the material facts to the contract. These are all the details that could influence the potential risk to the insurer and which are important to calculate the premium payable.
Car insurance contracts will require notification and disclosure of aspects such as a change of address for where the car is normally kept overnight (the risk address), any change to the postal address of the insured client etc.
This would also include changes in regular drivers of the vehicle, changes in risk area to be driven etc
- Duties towards vehicle maintenance and responsible use
It is only fair to expect from an insured client protected by insurance cover that he will look after the vehicle and not contribute willingly or negligently to any damage to the vehicle! The insured vehicle owner is obligated to:
- Keep the car in a roadworthy condition.
- Ensure that accidents are not caused by smooth tyres, faulty brakes and defective lights.
- Comply with vehicle security requirements by keeping the car locked, windows and other openings closed.
- Keep the required security devices activated and all keys safe.
- To avoid vehicle damage caused by drunk driving accidents.
- Ensure the authorised use of the vehicle only by licensed drivers
- Duties to assist the insurer in protecting his rights
The car insurer is obliged to make good his part of the agreement as well – but must be allowed by the insured client to not only meet his obligations, but also to protect his rights!
This is especially important in the event of an accident. When the vehicle has been in an accident, it can be expected of the insured client:
- To promptly report the accident, thereby allowing the insurer to investigate whilst evidence is still ‘fresh’.
- By taking action quickly after an incident, which will allow the insurance company to limit the losses in claims and put itself in a better position to defend against liability claims.
- The requirement to report the accident is not only required by the Road Traffic Act, but something clearly stipulated by the insurance policy.
- This requirement is important not only for vehicle accidents – but also for other instances of vehicle damage or loss.
- Insurance contracts could require that the police be notified within 48 hours of you or the regular driver becoming aware of any incident involving theft, attempted theft or malicious damage. A crime reference number should be obtained.
- In order to have a reasonable chance of apprehending a criminal, or recovering stolen goods, the police must be notified of the crime as quickly as possible.
- Crime data has revealed that the police will recover 90% of stolen cars in the 3 days after the theft.
- The insurer will require that the client provide a copy of the license of the driver who was driving during the accident.
- The client must deliver the vehicle to a recommended repairer when required to do so.
- The insured client should ensure that no costs are incurred, and that no admission of liability, offer or settlement is made to a third party without the consent of the insurer.
Under the terms of the car insurance policy the insurer has the right to stand in the shoes of the client for the purposes of civil court action. This is called ‘subrogation’ and means the insurer can defend any claim made against the client, use his name in the court proceedings or vice versa – and recover from someone else in the name of the client.
By allowing the insurer to protect his rights it also requires the client to make the car available at any reasonable time for inspection by the insurer or his designated assessor. The insurer has the right to inspect the vehicle not only after an accident but also if they are suspecting and investigating possible insurance fraud.
- Duties when termination of the insurance policy
Even when considering termination of the car insurance contract the clients must be aware of his obligations. The contract will stipulate the procedure for cancellation in a cancellation clause. We would like to advise policyholders to pay close attention to the requirements when terminating an insurance policy.
When considering the obligations on the part of the insured client, the phrase “the truth, the whole truth and nothing but the truth “comes to mind. The obligations are stipulated within the contract and the insured client, after signing the agreement, could be expected to be aware of his obligations. Failure to comply with any of the conditions may invalidate the cover provided by the insurer.
We would like to urge insured vehicle owners to pay close attention to: