The Big 5 at Inception of Cover

As a Taxi Insurance Specialist, Miss T is always dealing with a wide range of queries. She recently took a Sho’t Left to summarise the top 5 questions asked by TaxiSure clients at the inception stage of cover.

Sips Says: “It is important to note if your vehicle inspection certificate states that your vehicle is a rebuilt, modified or converted vehicle. If this is the case, a certificate of fitness or appraisal will need to be obtained to establish its road worthiness.”

  1. What is an Appraisal?

This is a detailed vehicle inspection done by a qualified assessor in case of rebuilt, converted or modified vehicles (i.e. non-factory changes and enhancements).

The appraisal must include 2 interior and 2 exterior high quality photographs, as well as a full description of the condition of the vehicle. The appraisal should also include the assessor’s recommendation for replacement value of the vehicle to establish the insured value should the insurer agree to cover the vehicle.

The appraisal is done at your own cost.

  1. What is a Vehicle Inspection Certificate (VIC)?

It is an inspection done on the vehicle to determine its condition and to establish if there are any non-factory fitted accessories attached to the vehicle. The VIC is done through one of the following establishments: PG Glass, Glasfit or Dekra. This is done at your own cost.

It is important to obtain the VIC as this document will provide the Insurer with a record of the condition of the vehicle prior to inception of cover as well as important information that will help them formulate the basis of cover.

  1. What is Basis of Cover?

Your vehicle can be covered through either agreed value or retail value.

Agreed Value is more specific for newly purchased vehicles. The vehicles will be insured for the purchase price upon agreement from the insurer.

The more common basis of cover is Retail Value and this is determined through platforms known as the Mead McGrouther Auto Dealers Guide and the TransUnion Auto Dealers Guide. These platforms determine an average estimate value of your vehicle based on its year, make and model.

Scenario:

You purchase your brand new vehicle in 2010 for R200 000 and insured it on the agreed value basis (R200 000). Should something happen to the vehicle within its first six months of cover, the value of indemnification will be the insured value and you will be able to purchase the same vehicle.

Three years down the line (2013) your vehicle is now worth R150 000 according to its retail value. Should something happen to the vehicle, you will be indemnified for its retail value or insured value (whichever is the lesser).

  1. What is indemnified?

With vehicle insurance the aim is to indemnify the Insured (you).

Indemnity simply means to place you in the same position you were prior to the loss.

In other words, they will not place you in a better or worse position as you were insured for. That is also one of the reasons the VIC is needed prior to inception of cover (to establish the position you were in prior to the loss and to indemnify you for that). Assessors are then sent out when a loss occurs.

  1. Why can’t I be placed in a better position after a loss?

If you have experienced a loss on a vehicle that is worth R100 000, it would be unreasonable to expect compensation to obtain a vehicle worth R200 000 as your premiums have been based on the vehicle worth R100 000.

Should you have any questions for Siphelele, click here to mail your query or call 087 233 8771.

To get a quote, click here.

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