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Motor Insurance
Thursday, March 1, 2012
Unlocking cover

Most insurance policies do not pay for theft from vehicles unless there is evidence of forced or violent entry. The positive aspect though is that some insurers will cover losses resulting from the use of jamming devices. Given fierce competition in the South African insurance market, this may herald an industry-wide shift towards the inclusion of loss through jamming under general insurance policies.


Recent media coverage about theft of property from vehicles arising from remote locking systems being jammed through the use of hand held remote devices has led many insurance policy holders to ask whether they are covered if they fall victim to this scam.
While most insurers do not cover property lost to jamming, “when this practice first came to our attention in early 2011 our insurer partners were requested to provide automatic conditional cover for theft of property from vehicles unaccompanied by forcible and violent entry,” explains Andrew Panzera, Executive Leader Operations, Commercial Practice, Marsh Africa.
Although the jamming reports highlighted the deficiency in cover normally provided, it led to a broader view that “our clients should have some protection for property stolen from vehicles irrespective of the manner in which entry was gained - even if it is possible the vehicle was not locked,” said Panzera.
While Marsh still encourages their clients to take due care of their assets, including securing vehicles, clients should not be unconditionally prejudiced through occasional errors of judgment.
Negotiations with most Insurers were successful and in March 2011 Panzera and his team were able to confirm the extension of cover subject to insurers being allowed to apply individual corrective action if necessary.
“This set an industry precedent and further notifications followed as other insurers recognised the market imperative to cover loss through jamming,” said Panzera.
While Marsh Africa’s redCarpet cover was the first to include losses arising from jamming, Panzera knows of a number of other insurers that have followed suit and “expects that, going forward, covering loss from jamming will become the norm, not the exception.”
It is important to note that although jamming scams led to this cover being sought, redCarpet covers any theft from vehicles without forcible and violent entry regardless of how the theft was accomplished.
The evolution of redCarpet, along with the speed with which other insurers began extending cover to include loss because of jamming, “indicates the efficiency with which the local market adapts to loss trends – as well as the power of competition in forcing otherwise reluctant insurers to match market best practice,” he observes.
 

Copyright © Insurance Times and Investments® Vol:25.3 1st March, 2012
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