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Motor Insurance
Sunday, July 1, 2007
Sharing liability

As the density of urban traffic escalates alarmingly the need to share vehicle space is increasingly being taken seriously. However, there may well be motor insurance policy issues that clients would do well to consider. Indeed, Mutual & Federal strongly advises policyholders to discuss concerns with their insurance broker.

Observes Sedick Isaacs, General Manager, Personal Business at Mutual & Federal, “Product structures differ across the insurance industry and definitions of cover may change in various product ranges.”

            For peace of mind, consumers have to establish whether they have appropriate cover in the event of injury to occupants or damage to the vehicle in situations where multiple passengers are being carried. Sharing arrangements came under the spotlight after the high-occupancy vehicle lane experiment on the N1 between Johannesburg and Pretoria at the end of 2006. The Gauteng Department of Transport and Metro Police combined efforts for this initiative to ease congestion by reserving the right hand lane exclusively for use of vehicles carrying a minimum of three occupants.

            Offering a lift to a friend or colleague is fine, but the consumer should not simply assume that motor insurance cover is in place.

            Clients should check the policy wording. Cover for carrying passengers depends on the insurer and the specific provisions of each product. For example, M&F’s Allsure policy allows vehicle-sharing for social purposes and the giving of lifts. This includes commuting, but the ‘use’ section of its policy makes a distinction between private and commercial usage.

            The cover remains valid when the driver is reimbursed to cover petrol and costs, but if the payment includes a profit element, the vehicle usage changes from ‘personal’ to ‘commercial’. Additional commercial cover may then be necessary. Your broker should be able to advise you on this point with specific reference to the policy concerned.

Copyright © Insurance Times and Investments® Vol:20.6 1st July, 2007
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