Motor insurance otherwise known as auto
cover is one of the mandatory requirements before one is allowed on the road
with their vehicle. The Kenyan traffic laws Act 405 makes it a basic
requirement for all vehicles on the road to have such cover. The same rule
holds in other countries. Getting a good motor insurance cover thus becomes
essential. Insurance companies offering motor covers are growing in numbers
making it a bit of a challenge to choose the best cover. The players in the
motor insurance industry are currently in a state of cut-throat
competition. Some offer genuinely attractive packages while others
offer rather questionable deals. The question then is; what makes a good
motor vehicle cover?
Interviewer:
What brought about the aspect of motor vehicle insurance? Why motor insurance?
Motor
vehicle insurance is as old as the invention of the motor vehicle itself.
After few days of inception, it was soon realized that man wasn’t in full
control of the machine. It had the potential to cause harm to which adversely
might result in death. That is why it was christened a lethal machine.
That is when the thought of countering its lethality was born. Motor vehicle
insurance was then born as a result.
Why motor
insurance? It is mandatory in most countries’ legal framework. This is majorly
because it helps compensate other road users in the event of an accident. The
Third Party Policy serves this role. It insures other road users like
pedestrians and buildings that might be damaged as a result of the accident.
This is the basic form of motor vehicle insurance.
With time
however there came the realization of the need to indemnify the vehicle owner
in the event of an accident. This is because a vehicle in itself is an asset in
which a lot of investments have been put into. It is common knowledge that no
one would want to lose an investment no matter the situation. This is why
financial institutions have agreed that they be used as collaterals for loans.
As an investment therefore, the need for insurance made sense. Motor
comprehensive was thus brought in as fall back plan for the vehicle owner in the
event of an accident.
When
taking up a comprehensive motor cover, what special features should one
consider?
Different
insurance companies have tailor made their motor vehicle covers in a quest to
keep their heads above the water in this overcrowded industry. But as a
consumer, one should pay attention to the extra stretch the company goes in the
reference to the following;
- Does it include a separate
cover the vehicle’s separate parts e.g. wind screens?
- Do they extend their
coverage outside the tradition to cover riots & strikes
- Does the cover include
‘special perils’ i.e. acts of God like floods, earth quakes
- While the vehicle is being
repaired for damages resulting from an accident does the company offer a
courtesy car?
- How much are the excess
protector?
- Do they consider the element of ‘no blame no excess’?
What do
we mean by the following insurance terms?
Excess
It is
that part of a loss that is borne by the insured. It is normally charged by the
insurance company in order to make the vehicle owner be a responsible and
careful driver. It saves the insurance company the costs resulting from the
driver’s negligence.
No blame
no excess
It is a
policy abstract that states who to blame for the accident. This basically means
that in case the driver is not to blame then they can’t pay the excesses.
As an
underwriter, what factors do you consider when signing up a vehicle owner for a
motor vehicle cover?
Some of
the considerations are:
- The experience of the driver
- Age of the insured. Young
persons are still adventurous and tend to involve themselves in highly
risky activities hence the need to take note of the age question.
- The insurance history of the
vehicle. How often has the vehicle been involved in accidents and claims
made?
- The condition of the
vehicle. Evaluation has to been done to establish this.
- What activities is the
vehicle going to be involved in? Is it for commercial or private purposes?
- Does the vehicle have
pre-installed anti-theft tracking device?
- What make/model is the
vehicle?
As a new
vehicle owner not familiar with the insurance industry, what do look into in an
insurance company before insuring with it?
As a
person who wants to be insured there are many considerations you need to make
before arriving at the conclusion on which company to sign up with. The
industry is crammed with each company offering its packages. Nevertheless,
there are factors that stand out. These are;
Rates
charged- are the
rates favorable? It should be noted that cheaper rates doesn’t always translate
to a better deal. The cliché that cheap is expensive applies here. You should
ask yourself where the insurance company will get the money to pay you a claim
when the premiums charged were low.
Stability
of the company– is the company a market leader or at least has a
recognizable position in the industry? Or is it at the brink of collapsing?
Reputation
of the company in terms of Claims payment– does the company have a good history in terms of
settling claims when they arise? It is good to establish its previous records
before agreeing to join them.
Expeditious
settling of claims– do they
pay up a claim on time or you have to be entangled in long and tedious
procedure before getting the settlement.
Kindly
highlight for us the procedure to follow when making a claim after being
involved in an accident.
The steps
to follow are:
- Call the police who will
access who will access who is on the wrong.
- Report to the insurance
company.
- Fill a motor claim form.
- Return the form together
with a copy of the driving license and police abstract.
- Tow the vehicle to the
nearest appointed garage.
- The company assessor checks
on the extent of the damage and negotiate with the garage owner.
- Repair authority is issued
if reparable. If not it is written off and claim paid.
What can
you say of the performance of motor vehicle cover in the market?
The fact
that it is a compulsory cover for any vehicle on the road makes it a popular
insurance product in the market. As a matter of fact it commands 60% of the
market segment. Third Party policy is the most popular and easy to sell. Motor
private and commercial are also picking up although they require more hyping
for their profitability to be realized.
However
the influx of young, inexperienced yet adventurous drivers in the Kenyan market
makes it challenging for the insurance companies to rely fully on the product
for its survival.
In
conclusion, kindly highlight some of the trends on motor cover that insurance
companies offer.
Alongside
the cover many companies have attached
- Forced ATM withdrawal cover
- Personal accident cover
- Enhanced benefits e.g.
tracking of the vehicle, loan repayment, loss good reimbursement etc
- Extended benefits at a
lesser cost.
- Insuring personal effects
- Rescue mechanisms
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