LISTEN: Insure that car or the bank will

LISTEN: Insure that car or the bank will

There’s no dodging paying insurance on a financed car.

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Listen to Wendy's on-air segment on Consumerwatch below or read the full story below the podcast.

Insurance is a grudge purchase at the best of times, let alone when you’re not making it through the month. Until your car gets stolen or you’re in the wrong place when a flash flood hits, and suddenly you’re really grateful that you’ve been investing in that policy.

The thing is, if your car is financed, you’re in breach of your contract if you cancel your insurance. As the car’s titleholder, the bank can insist that you have comprehensive insurance on the car until you’ve paid your last of those 60 or 72 instalments.

ALSO READ: Road accident claims: An attorney’s response

And to make sure, most finance houses ask their clients to provide proof that a policy is in place. And if you don’t they literally slap a policy on the car, and debit your bank account for it. And they can, as long as they disclose everything to you up front - what the policy covers, how much it’s going to cost you every month, the exclusions etcetera, and get your consent.

A consumers experience with 'imposed insurance'

Nicole Sharratt’s experience was pretty much the opposite of what should have happened, from start to finish.

She was contacted by Absa Vehicle Finance at the end of August and asked to email proof of insurance on her Absa-financed car within 14 days, failing which they’d take a policy out for her. What that policy would entail, she wasn’t told. 

She was just given the premium amount, which was slightly more than that of her existing policy.

The same day she emailed the proof to the address provided, and thought nothing more of it until six weeks later when she got another SMS, saying, again, that the bank hadn’t received her proof of insurance. 

And then came another one, a few weeks after that.

When she asked what was going on, a woman at Absa Insurance said the “system” showed that no proof of insurance had been received, and asked her to re-send the proof to her personal work email.

Nicole did that immediately, but on November 1 her Absa debit order was almost R645 more than usual, because it included an Absa insurance premium for her car.

And then to add insult to injury, when she called her contact in the bank’s insurance division she was told to call the vehicle finance division and sort it out herself.

That’s when I sent an email to Absa and that R645 was very quickly refunded with a big apology. Quite right, too.

Absa responds 

Turns out an email system glitch was to blame for Nicole’s insurance confirmation email not reaching the bank, and Nicole wasn’t the only one who ended up with a second policy on their cars, and two insurance premium debits. 

As for the high-handed way that the policy was imposed, Nelisiwe Baloyi, who heads Absa’s vehicle financing division, gave me a detailed break-down of the bank’s policy on how this “prove you have insurance or we’ll force a policy of our own on you” thing is supposed to happen - essentially lots of notifications, most of which didn’t happen in Nicole’s case.

Not good.

So - don’t cancel your insurance policy or downgrade it to third party only if your car is financed. And if you are asked to prove that you haven’t,  send them proof fast, and get them to acknowledge receipt.

Top reasons car claims are repudiated, according to the Ombudsman for Short-Term Insurance: 

*Unlicensed driver - with licences only being renewed every five years, it’s very easy to forget, so make sure you don’t.

*Unlicenced car. Yes, it’s a schlep to stand in a queue to do this, but the potential consequences of not doing it - a hefty fine; a repudiated insurance policy - are worse.

*Unroadworthy vehicle: if you have an accident in wet conditions and an insurance assessor finds out your car’s tyres were smooth or your windscreen wipers broken, your claim could be rejected.

*Driver not the “regular driver”. Make sure the person listed as the regular driver on the policy is in fact the regular driver if you want a claim to succeed.

*No tracking device fitted.

*No vehicle inspection carried out by your insurer’s assessment centre when you took out the policy.

*Failure to disclose all previous claims and other insurance history when you took out the policy.

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