Insurance firms cheating motorists

BENZ E 350Business Reporters
Drivers in Zimbabwe risk suffering loss of property as top insurance companies offer third-party insurance policies that do not actually cover third parties in the event of a crash.
Drivers boasting comprehensive cover fare no better, The Sunday Mail investigations can reveal.

A young woman who escaped death by a whisker after a learner driver reversed a UD truck into her at a traffic light complains bitterly over her treatment by ZIMNAT.

The driving school was covered by ZIMNAT insurance and when she tried to claim US$4 800 to cover repairs to her vehicle she was told she would only receive US$2 500 since the driver had third party insurance.

The balance, she was told, would have to come from the offending driver. The driving school involved flatly rejects the notion that it is liable, unhelpfully pointing her back to ZIMNAT.

Her story is not uncommon. Local insurance companies are using loopholes in insurance legislation to create policies that do not actually protect third parties.

In other jurisdictions, third party insurance typically covers third parties against losses incurred as a result of actions by the insured party.

Such policies do not cover the insured party against loss.

In some instances such policies have ‘‘excess’’ clauses where the insured party must repay the insurance company for any losses below a certain amount.

An example would be the insured party scratching a vehicle in a parking lot.

If the insured party has an excess of US$1 000, they would have to repay the insurance company for losses up to that amount.

However, the responsibility to pay the third party would remain with the insurance company.

Unscrupulous insurance players have contorted this accepted standard and are now refusing to settle claims beyond certain amounts, leaving aggrieved parties with no possible recourse.

In effect, what these companies are offering is actually not insurance since it is not possible to ascertain before the fact what a claim will be.

Third party insurance is, or at least it should be, liability insurance purchased by an insured (the first party) from an insurer (the second party) for protection against the claims of another (the third) party.

The first party is responsible for its own damages or losses whether caused by itself or the third party.

Regulations demanding that all drivers have at the very least third-party insurance are put in place in the interest of protecting third parties who could fail to recover losses if the offending party does not have the means to pay.

Insurance companies in Zimbabwe are deliberately circumventing the spirit behind third-party insurance.

The motor vehicle insurance landscape in Zimbabwe has been invaded by unscrupulous companies that only cover vehicles on paper.

When it comes to actually paying out claims and covering the vehicles in real terms, an assortment of excuses are used to shield insurance companies, allowing them to evade settling claims.

The back and forth is considerably frustrating and many people end up just giving up.

While most vehicles on Zimbabwe’s roads are insured, in essence, most of them are, in fact, not insured.

This is because getting insurance cover does not mean simply paying money to an insurer, it means having access to the cover in the event of an accident.

In addition, it means having protection for other road users which are supposed to be covered by third party policies.

Third party insurance charges are usually in the region of US$35 for every term (4 months).

Comprehensive cover, which is charged at 4 to 5 percent of the vehicle’s value, can be $250 for a vehicle worth $5 000, while the owner of a vehicle worth US$20 000 might have to fork out around $1 000 per year, depending on the insurer.

Consider a lady driver who spoke to The Sunday Mail, she drives a Mercedes-Benz E-class worth US$50 000 and was paying US$2 500 comprehensive insurance every year to an insurance company.

She was recently involved in a road accident and her car was seriously damaged.

She assumed her car was covered until her insurer started coming up with numerous excuses to deduct money from the claim.

When she tried to protest, the insurance company pointed her to a ‘‘driver under 30 years of age’’ clause, limiting the payout she could get.

A number of additional deductions, which included a ‘‘driver with less than five years’ driving experience clause’’ left her having to foot more than half the cost of repairs.

This is not the only case, many vehicle owners in the country have come across similar situations, with some insurance companies even coming up with clauses to completely avoid payment, thereby leaving the vehicle owners in the cold.

Motorist should ask for all the exception clauses before committing to an insurer.

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  • SomeOneWhoKnowsInsurance

    I have a few questions for the writer which I am sure she never researched before she poured her emotions into this good paper;
    1. where in the world (just one country, even maybe some imaginary place down there in Disneyland) would you find insurance cover without limits for a $30 premium?,
    2. where in the world would a 20 year old driver, or a 45year old with a drivers licence with less than 5 years be charged the same premium and/or excess as a 40year old with a 20year old drivers licence?, common sense tells me these are completely different risks,

    Mind you, an excess is not “repaid back to the insurer” by the insured, but is contributed by the insured to the garage repairing, or to the sum insured should it be a total loss.

    Another point of correction, excesses are not paid for losses below certain amounts, but for any loss occurring (which is usually usually 10% of LOSS for motor claims, not including windscreen claims which usually have a 33.33% excess due the high risk inherent there to).

    That is why there is a statutory limit of $2,500 (not a hundred thousand which you want insurers to pay to a total loss for a third party’s Discovery 4) to protect third parties; imagine if there was no such statute, how many would recover from the charged party a single dollar? The owner of the discovery 4 should take full cover for his vehicle. If the 2500 has been paid by the insurer, tell me what is scrupulous about that my sister?, you want a million dollar 3rd party claim to be paid from a $30 premium? (that doesn’t make any sense to me, even the law of large numbers would refute this)

    Yes third party cover is insurance since you are ascertained that you will be covered up to 2500 for the party claims. If you want more cover they have what they call;

    1. Comprehensive insurance with limits which range from $10,000 to $20,000,
    2. Umbrella Liability Policy which protects the insured for losses exceeding the 10 or 20k comprehensive cover.

    For these excesses there is what is called an excess-buy-back whereby the insured will have all the excesses removed for an increased premium. Also of note is that for any policy inception the insured will be given an average 8 paged policy wording with all these explanations.

    Maybe you did not know the definition of insurance, Wikipedia says Insurance is the EQUITABLE transfer of the risk of a loss, from one entity to another in exchange for payment (I am sure $30 is equitable for a $2500 payout).

    I think if you had made your fiinal statement the headline it would be more fair to insurers….”Motorists should ask for all the exception clauses before committing to an insurer.”

    • Taurai Museka

      This is the best comment I’ve ever read on a post. I hope the writers eyes were opened!