Curnow KZN Insurance Brokers

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?

In transferring his risk, Mr A pays a monthly premium of R100.00 to his Insurer.
This equates to an annual premium of R1 200.00.
During a 12 month cycle Mr A has several claims, the total of which amounts to R1 200.00.
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.
Mr A’s claims loss ratio is therefore 100%.
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:-

Mr A submits claims to the value of R2 400 during the same 12 month cycle.
In this instance for every R1 Mr A has paid over to the Insurer, the Insurer has paid back R2.
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);
exclusions (certain covers may be withdrawn) and
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;
Your original registration document

Financed Vehicle:

A ‘cross border’ letter from your Broker confirming that your vehicle is insured which is to be forwarded to the Bank;
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:

Accidental or deliberate damage to your property caused by any person or group taking part in a riot, strike, lock-out or civil commotion.
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.
This includes any act taken by a lawfully constituted authority in controlling, preventing or suppressing any of the events referred to above.

Q: What does SASRIA not cover?

A: The following are NOT covered by SASRIA:

Loss or damage that is consequential or indirectly related to the events mentioned above.
Loss or damage caused by or related to the stopping or deliberate slowing down of work.
SASRIA does not cover you if your property is dispossessed or confiscated by any lawfully constituted authority.
Loss or damage caused by looting or theft, unless it is caused by any of the events referred to above.
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 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.

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