Motor Claims

Frequent small Motor losses

Business often suffers losses, such as shoplifting, staff pilferage, miscalculations, accounting errors and straight theft by persons unknown. These losses are regarded as a ‘trade risk' to the business. The risk of trading that has to be built into the sale price of the product. If businesses could curtail these trade risks, the end sale price could be reduced, or the Stakeholders could earn a slightly larger return on their investment. Insurance is not designed to compensate the business for trade losses. Therefore trade losses must be absorbed by the business and taken into account when preparing the financial report.

There are, however, other losses that under certain circumstances could be considered an insurance risk. A minor motor accident where the business entity decides that it is not worth their while to submit an insurance claim. The repair costs could be either less than the policy first amount payable (Excess), or not much higher. CivilSure team  has years of experience of insuring its niche businesses and have a reasonable understanding of what risks the business is exposed to. Therefore CivilSure products may imposes a high first amount payable at a level to ensure the business to be more careful in their transport activities and selection of drivers - but strives for a lower insurance premium as RISK = REWARD.

Losses remain losses unless an insurance company actually settles the loss in terms of the insurance policy. Thereafter the loss is termed a claim. A claim is a loss paid for by an insurance company. When an insurance company receives numerous, or frequent, notifications of losses, where some convert into claims due to settlement, the insurance company are likely to increase the first amount payable (Excess) to force the business to be more careful and suffer losses within their own financial ability.

From a businesses risk management perspective, self-funding by the client in respect of smaller losses is a far more efficient way of financing the risk. Insurers will always include a provision for anticipated smaller claims into their premium for the next year. So it is cost effective for the business to retain the smaller losses rather than transfer these to an insurer and suffer an increase in the premium payable.

Claims Procedure

All Accidents - whether you have suffered damage or not must be reported within a reasonable period.

· Record the scene of the accident by sketches

· Obtain the names, addresses and contact numbers of parties who witnessed the accident

· Record the names, contact and ID numbers, registration numbers, make and model of vehicles, insurance details of all the parties involved in the accident

· Report to a Police station and obtain Accident report number

· Accidents where persons may be injured must be reported by the owner/driver directly to the RAF (Road Accident Fund) at P O Box 2743, Pretoria, 0001 on a prescribed form within 14 days

· Staff injured - report to workman's compensation within 14 days or as per prescribed period.

· Never admit liability to a third party. THIS INCLUDES ANY TRAFFIC OFFICIAL - Instead refer all third party correspondence, allegations and demands to CivilSure

· If the vehicle is drivable, it may be taken to a drive-in assessment centre Mutual & Federal where damages are assessed and authorised if all the policy conditions have been met

· Alternatively, where the vehicle is drivable, should take it to a panel beater for a quotation and insurer assessment. This option is available if you do not want to make use of the drive-in assessment centre or a assessment centre is not located in your area

· Some Insurance providers have an approved list of panel beaters - please liaise with your broker or a SureTimes (PTY)LTD  claims personnel for the finer detail of who is approved - please note the choice of Panel beater is always yours to choose so as to ensure your vehicle is repaired to your satisfaction.

· If the vehicle is not drivable, please contact a tow away company to have the vehicle towed (the reasonable towing costs are covered - except known write offs) to a suitable panel beater.

· If you are unable to contact SureTimes (PTY)LTD   or your broker (the accident could occur outside business hours) and the vehicle is not drivable, arrange for the vehicle to be towed to the nearest reputable panel beater. Advise your broker or SureTimes (PTY)LTD   as soon as possible of the accident and the whereabouts of the vehicle - obtain a claim number

· Always complete the Motor Accident Claim Form (the document is available under "Claim Forms" on the CivilSure Website) or request a claim form to be faxed to your office

· Never authorise repairs - this authority only vests with your insurer after the vehicle damages have been assessed and all necessary claim documents received and checked.

· The vehicle will only be released by the panel beater once you have paid your policy excess(es) plus any other extras incurred (storage, extra work not accident related etc) have been paid

Ø In certain cases, where the damage is nominal, insurers may settle the loss without assessing the vehicle. These cases should be presented to CivilSure together with two quotations quantifying the damage. We will approach your insurers for approval of payment of the lowest quote, less the applicable policy excess (such approval can never be guaranteed as insurers still reserve the right to assess the vehicle before indemnifying you)

Theft of a vehicle

· Notify the Police, your Broker and or SureTimes (PTY)LTD  immediately - obtain a claim number

· Most insurers have a waiting period of between 30 - 60 days before they settle a bona fide loss - reason being is that a large percentage of vehicles are recovered within this period

* Complete the Motor Theft Claim Form (the document is available under "Claim Forms" on the CivilSure Website) or request a claim form to be faxed to your office

· In certain cases, where there is Theft of motor accessories (e.g. CD players, wheels etc) only, insurers may settle the loss without assessing the vehicle. These cases should be presented to SureTimes (PTY)LTD  together with two quotations quantifying the damage. We will approach your insurers for approval of payment of the lowest quote, less the applicable policy excess (such approval can never be guaranteed as insurers still reserve the right to assess the vehicle before indemnifying you)

Total Loss Settlements - Theft & Vehicles beyond Economical Repair

· An Agreement of Loss will be presented to you in proposed settlement of an admitted claim. The amount tendered / offered including the excess and other deductibles MUST BE MARKET RELATED AS THE CIVILSURE POLICY IS A POLICY OF INDEMNITY - To indemnify a client means to put him back in the same position that he was in immediately before the event that resulted in loss or damage. To be indemnified, he should neither be better or worse off after the claim than he was before the claim, nor make a profit on a claim. DO NOT ACCEPT THE OFFER IF YOU WILL BE WORSE OFF - obtain a letter or a quote from more than one reputable motor dealer stating what the trade in and retail price is of that specific vehicle and forward such communication to your Broker or CivilSure

· This amount will be net of your policy excess(es) and any outstanding Hire Purchase/Lease Agreements etc

· BEWARE - pre existing accident damage, rust will result in a reduced claim settlement

· The following documents will be required before the amount stipulated in the Agreement of Loss can be paid : the original certificate of registration of the vehicle & a certificate confirming the vehicle has been scrapped

Windscreen claims

The excess is 25% of claim with a minimum - hence it is important for your company to obtain the lowest windscreen price as you bear 1/4 of the loss or the minimum

Example

Company A = Windscreen R5, 000.00 - Excess = R1, 250.00

Company B = Windscreen R3, 500.00 - Excess = R875.00

· Take your vehicle to any National Auto Glass, PG Glass branch or a Windscreen/ Glass Dealer of your choice and furnish them SureTimes (PTY)LTD  contact details or your brokers

· Windscreen/ Glass Dealer will contact CivilSure for authorisation which will be immediate providing the terms of the policy have been met

· You will need to pay the Windscreen excess to Windscreen/ Glass Dealer before they will release your vehicle

· If you are unable to contact us (over weekends etc), certain Windscreen/ Glass Dealer usually authorise the windscreen replacement nett of the policy excess if you are able to provide them with your policy details confirming the vehicle is covered. Windscreen/ Glass Dealer will then invoice your insurers and their account will be settled by your insurers provided the terms of the policy have been met. If not, you will be liable to Windscreen/ Glass Dealer for the settlement of the whole account

· Alternatively, you could pay for Windscreen/ Glass Dealer account in full. Your insurers will then reimburse you nett of your policy excess providing you have complied with all the policy conditions

Excess Recovery

· The excess portion on all motor policies is your uninsured portion of the loss

· If you are not liable for the loss the recovery of your excess is pursued as a courtesy and can never be guaranteed.

· SureTimes (PTY)LTD  does issue letter of demands if the amount claimed falls within your excess - however this is done as a courtesy and can never be guaranteed. CivilSure does make use of a panel of attorneys who can assist you in legal advice as to the success of a recovery and claim for general losses

· You are able to insure the excess - quotes are available on request to insure the excess and the loss of income that your vehicle generates.

Ø Recoveries are vitally important to you- because even if the insurer has paid your claim out, the claim still reflects in the company's claims experience and may affect the schemes future rates and or your company's future premiums, excesses and insurance terms going forward.

Ø The claims experience is reduced by recoveries made by the insurance company.

ØSureTimes (PTY)LTD  underwriters analyses the claims history, both when they quote and during the currency of the policy, but particularly before providing renewal terms. The underwriter too will want to cut out frequent small losses which merely serve to erode the premium without providing any real value to the client.

Ø SureTimes (PTY)LTD   deals with this by underwriting the risk, imposing higher first amounts payable (Excesses) or having special endorsements - drivers with less than 10 years experience a further excess of R5,000.00 or all vehicles must be governed to 80 KM per hour.

Glossary of Insurance Claims terms

Betterment

Betterment describes a situation where the client has taken the opportunity on the occasion of the loss or damage to replace the property with something better and consequently will have a proportion of the claim deducted, depending on the extent of betterment.

Claims experience

A record of the client's claims, usually broken down by insurance year and type of claim (class of insurance)

Claims ratio

The ratio of claims to premium paid, usually expressed as a percentage of same

Condition of average

Average refers to a penalty against the client if he is underinsured at the time of a claim. The client will bear a ratable proportion of the loss based on the amount by which the property is underinsured.1

The formula for average is as follows:

Sum insured x Loss

Actual value at risk

Contribution

Contribution in the business insurance context is when there is dual insurance. The insurance company will not be liable to pay more than a ratable proportion of the loss. This often happens when the bondholder also insures the building.

Defined events / Perils insured

Defined events and perils insured describe the events or perils against which cover is provided.

Duty of care

This is a phrase you will hear in relation to a business insurance contract. All short-term insurance policies contain a condition which requires the client to take reasonable care to prevent losses or accidents.

Indemnity

Indemnity is a term commonly used in insurance. To indemnify a client means to put him back in the same position that he was in immediately before the event that resulted in loss or damage. To be indemnified, he should neither be better or worse off after the claim than he was before the claim, nor make a profit on a claim.

Limit of indemnity

The limit of indemnity is the maximum the insurance company will pay for any one claim. It does not mean they will pay this amount for any loss, but it is the maximum they will pay. In accordance with the principle of indemnity, the insurance company will only pay what the client loses. The client may not make a profit on a claim.

Offer and acceptance

Offer and acceptance form the basis of a legally binding contract. In the context of insurance, the client requesting a quote does not constitute an offer, and most proposal (application) forms state that the insurance company is not bound to accept the risk once the proposal form has been completed. This is, however, the beginning of an offer.

In practical terms, to acquire a portfolio of insurances for a business enterprise, the client or their broker will describe the risk they wish to transfer (the insurance they wish to purchase) to the insurance company. This is done by means of a proposal form, or if the client has a broker, the broker may compile broking notes.

Based on this information, which forms part of the contract, the insurance company prepares their terms at which they will accept the risk. The terms include the scope of cover, the premium, and the first amounts payable. Special terms may be required for certain risks, such as what fire or theft protections must exist for the cover to be valid in advance of a possible claim. These terms may differ from the quotation requested; for example, the insurance company may require higher first amounts payable than those requested by the client. So, the offer starts with the client and is only completed when the insurance company state what their terms are and what premium they want for the risk.

If the client accepts the terms, subject to all of the other requirements for a legal contract being present, you then have offer and acceptance, and a legally binding contract of insurance will come into force.

If the client does not accept the insurance company's terms and suggests alternatives, such as a lower first amount payable, this amounts to a counter offer. If the insurance company accepts the counter offer, then a legally binding contract of insurance will come into force.

Proximate cause

In its simplest form, the proximate cause of a loss is the dominant cause without any other intervening causes. It is often defined as the uninterrupted chain of events between cause and effect, the cause being the event and the effect being the loss or damage.

Recovery

When a client effects a successful right of recourse against another party or an insurance company does so in terms of a subrogated right of recourse, this is said to be a recovery.

Re-instatement value conditions

"Re-instatement value conditions" is a term you may often hear in the insurance environment. Essentially, when the re-instatement value condition applies, the insurer will replace or re-instate the insured property with similar property to that lost or damaged, but not with property more extensive than or superior to the property lost or damaged when new.

Sometimes, payment on a market value basis will not indemnify the client. An example is a partial loss of a building by a fire. It would not be feasible to try to obtain second-hand building materials of the same quality and age as those destroyed by the fire. Consequently, the only way to re-instate the building will be to use new materials, but not more extensive or superior to those destroyed when they were new.

If the insurer elects to re-instate, they are obliged to do so even if it is more expensive than they thought it would be or even if the cost of re-instatement exceeds the sum insured.

Right of recourse

Where another party has been responsible for loss or damage to the client, there may be a right of recourse against the other party. This right of recourse allows the client to recover their loss from the other party.

Subject matter of contract

The client's insurable interest in the subject matter

Subject matter of insurance

Subject matter in a business insurance context is the subject of what is insured. This could be material damage to property, an event giving rise to a legal liability, or loss of a legal right. For example, the subject matter of a fire policy may be buildings, plant and machinery, stock, tenants' fixtures and fittings, or office contents.

Subrogation

Where loss or damage is caused by a third party, the client may have a right of recourse against such a person for the loss or damaged caused by him. Subrogation is the term used to describe the assuming or taking over of the client's right of recourse by the insurance company. At law, the insurance company is entitled to such right of recourse once they indemnify the client. The subrogation clause in a policy amends the common law position to the extent that they may exercise this right of recourse before the insured is indemnified. In terms of this clause, the client must do and permit all such things to be done as may be necessary to give effect to the right of recourse, at the expense of the insurance company.

Sum insured

This is the total value of the insured property as estimated by the insured. Most policies that rely upon a sum insured as the basis of coverage impose the condition of average to penalise the insured if the sum insured is less than it should be.