Car insurance: pertinent advice for 2012
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2012
Wed
22
Feb
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As another year starts and most household budgets shrink even further, monthly car insurance payments routinely come up for review.
While revisiting car insurance on an annual basis is the correct thing to do, Gari Dombo, Managing Director, Alexander Forbes, Insurance says “the annual household insurance review should also establish checks to ensure that insurance payments are not missed along with a review of cover in light of new threats, like car jamming.”
While car insurance installments can be reduced by either increasing excess or reducing cover, policy holders should understand that both involve an element of self insurance.
So, “before policy holders choose to increase their excesses or reduce their cover they should be confident that, in the event of loss, they can make up the shortfall that they have technically agreed to self insure” says Dombo.
While policy holders take a lot of time considering how best to increase their excess or reduce cover, “few bother to put mechanisms in place to ensure that their monthly payments do in fact go off each month” says Dombo. The result is that a lot of policy holders often miss payments and, despite years of paying car insurance, find their claims rejected.
Except for new policies, legislation states that the minimum grace period to receive payment on a monthly policy is only 15 days from the date that the premium (payable in advance) is due. So, if policy holders fail to pay on time any losses incurred more than 15 days after the beginning of a month for which the premium was due can be rejected if the insurer sticks to the letter of the law.
Furthermore, many policy holders don’t realise that while “it is courteous for your insurer to let you know when a debit fails, they are not obliged to alert you” warns Dombo.
And even where insurers do have measures to warn clients of default “considering past problems with post, sms and email communications, checking your own statements remains the best way to ensure that debit orders have taken place” says Dombo. While some insurers will not stop cover if the missed debit order was due to bank error, it is very difficult to get a bank to admit fault in this regard.
And even though some insurers allow a re-submission of the debit order within grace periods longer than 15 days, insurers tend to frown on clients who fail to honour debit orders “as this may be a sign of a broader moral risk” warns Dombo.
Certainly, while Alexander Forbes will continue to cover vehicles until the premium for the second month is also unpaid, the policy would then lapse back to the last day of the month for which premium was received. This could result in “being uninsured for two months, often without the policy holders knowledge, all because they didn’t check their statements” explains Dombo.
As such, policy holders should check debit orders every month - not simply rely on their insurer to contact them if payments fail. “And when debit orders do fail, policy holders should speak to their insurer immediately to make arrangements to pay” adds Dombo.
Finally, a new danger on the horizon for car owners is car jamming, when criminals override vehicle remote locking signals using a gate remote control device. While your insurer may pay if the vehicle is stolen, property taken from the vehicle may not be covered.
Furthermore, since all risks policies generally exclude property left in unattended motor vehicles unless removed from a locked vehicle showing evidence of forced entry, “all risks policy holders should check or amend their cover to include loss through car-jamming” advises Dombo.
While Alexander Forbes’ all risks cover does not exclude theft from unattended vehicles, Dombo believes that policy holders should share in the risk by assuming some excess. This also “provides an incentive for policy holders to check that their vehicles are locked before leaving them” adds Dombo.
That said, the best way to protect against people using gate remote signals to jam your automatic vehicle locking system remains “making sure that your vehicle is properly locked before walking away from it” concludes Dombo.
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