We're driving less, so car insurance should go down, right? It depends who you're with

With barely any traffic on our roads as most people obey lockdown regulations by staying home, the risk carried by motor insurers — of car theft, hijacking and accidents — has dramatically reduced.

So, are they proactively telling their clients — many of them battling financially as a result of Covid-19 — that they can expect to pay far lower premiums during this time?

Not exactly.

Discovery Insure client Max Mosselson has a comprehensive policy, and full premiums are due, “despite the fact that my family’s cars are all in the driveway behind a locked gate, so there is barely any risk for Discovery to cover”.

“I got an e-mail from the company advising that I could still earn points on the driving app, despite barely driving this car, but the premiums are the issue,” he said.

TimesLIVE asked a number of motor insurers if their clients would benefit from the reduced risk created by lockdown, and if so, how.

Discovery Insure

Discovery Insure hasn’t reduced its clients’ premiums, but instead made it possible for them to pay those premiums with rewards they’ve earned.

CEO Anton Ossip said clients who had opted to “bank” the cashbacks they earned on the Vitality Drive programme by driving responsibly, may now use those funds to pay their premiums if Covid-19 has left them struggling to meet their financial commitments.

Other relief offered by Discovery Insure includes:

• Qualifying clients may select the Premium Relief option if they have the equivalent of at least two months’ worth of premiums in their Excess Funder Account (EFA)
• For clients who don’t have sufficient funds in their EFA but have received fuel cashbacks over the past six months which are greater than a single premium, the next premium may be waived and recouped from future fuel cashbacks.
• Business clients may apply for an advance on the cashback they have earned in order to pay their premium in full or part, provided that their policy is within six months of the next anniversary.

And for the month of April, Discovery Insure will calculate fuel cashback based on their clients’ average spend during the months of January, February and March.

Naked

Short-term insurance newcomer Naked’s business model — which has a lot of policyholder flexibility built into it — has come into its own during lockdown.

Its “CoverPause” function, activated until the end of June, allows clients to switch their accident cover on and off, via an app, as required.

If they pop out to the shops to stock up on essential groceries, they can click the “resume accident cover” button on the app, and it’s done immediately, and they only pay a premium for comprehensive cover on that day.

But if they forget to hit “pause” again before midnight, they’ll pay the higher premium for the next day, too.

So the car is fully covered for things that could go wrong while it is parked — but there’s no cover if it’s being driven, unless they lift the pause.

On average that will see clients paying just 10% of their usual monthly premium.

Telesure (Auto & General, First for Women, Budget Insurance, Dialdirect)

“There are multiple ways that we offer maximum flexibility, from removing some items on cover: for example jewellery that isn’t being worn at present, to premium waivers, policy pauses, and where possible, discounted rates,” said CEO Robyn Farrell.

“There are also options to reduce cover with no penalties for increasing it when things return to normal.”

Santam

“All our clients have the option to reduce their cover at any time, which will result in a reduced premium. For motor insurance, you have the option to change your comprehensive cover to third party liability, fire and theft only.”

Outsurance

Outsurance is not suspending premiums across the board, but has undertaken to reduce excess payments for those clients who do have a motor claim between April and June 2020 “to assist with cash flow needs”.

“For clients who miss a premium and are within six months of getting their OUTbonus payment, we have made the OUTbonus available to be used in lieu of premium.

“Clients may also contact us to temporarily reduce their cover, without impacting terms when changing back. For example, a customer who has a comprehensively insured vehicle, which is not financed, may want to temporarily reduce cover to third party fire and theft — though natural perils such as flood, fire and hail  are not generally covered under third party fire and theft, during this period we will include this cover.  

“If the lockdown continues for longer than expected, or claim volumes observed are lower than expected, we will review the premium position and will communicate this to the market.”

MiWay

An automatic 10% reduction in car insurance premiums for the month of April — the company says this is going to cost them more than R25m.

King Price

The insurer is offering its motor insurance and home contents clients two “solutions”.

First, a reduced-cost option for comprehensive car clients, enabling them to switch to third party, fire and theft cover, with accident cover at no extra cost, which will protect them while driving during the lockdown restrictions. “The saving could be as much as 70%.”

Second, for home contents, clients can switch from comprehensive cover to an option that covers most insured perils but excludes theft. For clients who are comfortable to exclude the theft risk, the saving is around 60%.

GET IN TOUCH: You can contact Wendy Knowler for advice with your consumer issues via e-mail: consumer@knowler.co.za or on Twitter: @wendyknowler.