Only one in three cars on South African roads is insured. That is because many of us can’t afford the premiums, which have been forced sky high by accident repair costs, crime and dishonesty.
“Car theft and hijacking have stabilised over the past couple of years,” says Caroline da Silva of the South African Insurance Association. “The year 2001 saw a 2% reduction in car thefts, but our accident rate is one of the highest in the world. The industry pays out nearly R6-billion a year on car claims, and two-thirds of that relates to accident damage.”
But accidents are accidents and crime is no longer a major factor, right?
Wrong! Just because there is no villain with a gun involved doesn’t mean that there is no skulduggery. There is huge fraud and corruption in the repair industry, often starting at the accident scene when the policeman and the tow-truck operator may collude to get their cut out of the deal. If they can ensure the car gets towed to one of their contacts in the panel-beating business they stand to get a healthy kickback. And because their bribes can’t be invoiced as such, they have to be built into the repair cost.
“The panel beater orders new parts, as specified by the insurance company, but fits second-hand or pirate components to the vehicle,” says Da Silva. “Once the assessor has signed off the job the new parts are returned to the supplier for a credit and the client is the ultimate loser. The insurance company pays new prices for second-hand parts taken from stolen cars they have already paid for.”
And, of course, the second-hand spares industry provides a lucrative market for parts stripped off stolen cars, so the cycle is perpetuated.
Motorists are often disgruntled with what they perceive as the shabby treatment they receive from their insurance companies.
The Assistant Ombudsman for Short Term Insurance, Jim McIntosh, says the most common disagreements arise because people don’t read their policies properly and have false expectations.
“A major problem is that they don’t comply with the prescribed security levels and are then upset when the car is stolen and the company balks on payment.”
And then there is the way we twist the truth a little when it suits us.
In an era of increasing self-employment, small businessmen insure their vehicles for private instead of business or commercial use because the premiums are lower and then feel hard done by when there’s a problem after a claim is incurred during their working day.
McIntosh’s advice to car owners is to make sure they know exactly what they need and then take out the correct cover. Read the conditions carefully and know what you’re paying for before inception, then double-check the policy when it arrives and you won’t have a problem when you need to claim.
Short-term insurance broker Mark Logie agrees. “You get what you pay for. The insurers are pretty reasonable and don’t try to screw you if you’re properly insured and don’t try any funny tricks. But you have to consider everything when comparing quotes.
“Look for hidden excesses in the policy and, remember, they can vary tremendously according to who the drivers will be. Determine whether your car will be covered at its replacement value or its market value, because they are different.
“And if you have a history of claiming regularly, even on your household policy, it could affect your car insurance, so don’t make frivolous claims.”
For those who have an older vehicle that might not be worth repairing after an accident there is the option of a policy covering balance of third party, fire and theft.
One complaint that appears to come up regularly is that of car hire while the insured vehicle is being repaired or replaced. Many people believe this is a normal part of their insurance cover, but it often is not.
The insurance companies may be in the fortunate position of making the rules, but they usually stick to them. It is worth remembering that if we measured the honesty levels of the companies against those of their clients we would find a much higher percentage of crooks on our side of the counter.