The Covid-19 lockdown is likely to permanently change the way many people work, with more expected to be working remotely or from home in future and only travelling to their workplace a few times a week or only when necessary.
Not driving their vehicles as much or as far as before, having a reduced risk of being involved in an accident, and less traffic and congestion creates an opportunity for motorists and households to reduce their monthly insurance premiums.
Many insurance companies have duly temporarily reduced motorists’ monthly premiums.
Wynand van Vuuren, head of legal and customer experience partner at King Price Insurance, said the accident portion of comprehensive motor vehicle insurance accounts for 60% to 65% of monthly premiums; insurers will have that leverage to give motorists cheaper premiums and still have a profitable business because they are still rating the risk correctly.
He advised insured people to check their insurance policy schedule that lists all the warranties that influence their monthly premium and ensure they are still completely accurate.
“For example, if your car was normally just parked under a roof and now it’s locked up in a garage, that can already result in a premium saving.”
You should then phone your insurance company or broker and inform them that you’re only travelling to your office however many times a week, and request a premium reduction.
“I would advise customers to shop around, because if your current insurer takes this into account but won’t cut your premium, you are not insured at the right place,” Van Vuuren said.
He added that household contents insurance is also expensive and a large portion of the entire policy – but that risk is also greatly reduced with people working from home.
“Normally 60% to 65% of the premium you pay caters for theft of your house contents. If you are now at home, your insurer must take that into consideration and make a premium adjustment.”
Van Vuuren said there has been a huge decline in accident claims – the biggest expenditure for insurers – because people have changed their lifestyles since the lockdown was introduced.
“I think that will be a permanent change. Everyone has learnt that you can get the same result using [Microsoft] Teams, Zoom or online [meetings] and people are not on the roads as much anymore.”
Fewer policy cancellations than expected
While most households are under increased financial stress and many people are losing their jobs or having their salaries reduced, Van Vuuren said the number of clients who have cancelled their policies is lower than anticipated at the beginning of the lockdown.
He advises motorists and households against cancelling their short-term insurance policies because of the increased risk they would be exposing themselves to, insisting “there is always an alternative [policy]”.
“The last thing you should do is to cancel your insurance. Many companies are now saying don’t cancel and we will put you on third party, fire and theft. But not many people understand that they then don’t have accident cover anymore on their car and that is their biggest exposure.”
Insurance claim rejections
Van Vuuren, who spent five years as a senior assistant at the Ombudsman for Short-Term Insurance, highlighted circumstances that might lead to some motorists who have failed to renew their driver’s- or vehicle licences having their insurance claims rejected.
All short-term insurance policies specifically state the insured is only covered for accident damage if the driver was in possession of a valid driver’s licence at the time of the accident.
“This is what is upsetting people now. There are insurance companies that will blatantly reject a claim because an accident happened and the driver did not have a licence or could not renew their licence.
“An insurance company can’t do that because there is a hurdle they first need to cross before they can reject a claim in terms of the clause that requires a driver to have a driver’s licence.
“We talk about a causal nexus between the way in which the accident happened and the fact the driver’s licence has expired. In other words, the fact the driver wasn’t in possession of a driver’s licence must be material and must have contributed or caused the accident,” said Van Vuuren.
“If they cannot show that, they can’t reject the claim.”
Licence renewal headaches
A directive issued by the Road Traffic Management Corporation (RTMC) on July 22 extended the validity period of driver’s licences that expired between March 26 and August 31 this year to end January 2021.
This followed the Automobile Association (AA) launching a petition urging the government to extend the validity period of licences following problems with renewals at Driving Licence Testing Centres (DLTCs).
DLTCs are only operating at 30% capacity because of the Covid-19 lockdown regulations, which has made it difficult for motorists to make an online booking to renew their driver’s licence. People over the age of 60 are also being refused access to test centres because they are in the Covid-19 high-risk group.
Vehicle licence discs, temporary permits and roadworthy certificates that expired during the same period are valid until August 31.
AA CEO Willem Groenewald said motorists want to be compliant and want to remain legally on the road but are experiencing problems doing so.
Don’t assume the extension means you’ll be covered
Van Vuuren outlined an example where a motorist would have difficulty getting their insurance company to settle a claim: if, despite having had the opportunity to do so, the person had not renewed their driver’s licence for a year after its expiry, even though their eyes may have deteriorated during this period. If they had undergone an eye test when they renewed their licence, their licence might have been endorsed and they might be required to drive with prescription glasses or contact lenses.
However, Van Vuuren again stressed that the motorist’s poor eyesight must have contributed to the accident claimed for, for this to be used as a reason for rejecting a claim.
Regarding an expired vehicle licence disc, Van Vuuren said in terms of the insurance policy wording in most policies, the insured is responsible for ensuring their vehicle is always in a roadworthy condition.
Van Vuuren stressed that an insurance company cannot merely reject a claim because a motorists’ vehicle licence has expired.
“But if the tyres on your car are not in a roadworthy condition, you may have a longer braking distance and could rear-end another car. That is relevant, and the claim can be rejected.”
Listen to Nompu Siziba’s interview with Christelle Colman from Old Mutual: