If your 70th birthday is coming up, you’d be advised to check the terms and conditions of your motor vehicle insurance policy. You may be required to prove regularly that you are fit to drive.
An elderly driver moved her car insurance policy from Outsurance to Discovery Insure over a year ago. She is in her 80s, so Discovery Insure required her to produce a certificate from her doctor saying she was fit to drive. At the time, she understood this to be a once-off requirement.
But on the first annual renewal, she was informed she would have to produce another doctor’s certificate, and that one would be required each year, or her policy would be cancelled.
“It is standard practice in the motor vehicle underwriting industry to require a certificate from your doctor, as you get older, that you are fit to drive,” Philippa Wild, the head of technical marketing at Discovery Insure, says.
“Discovery Insure requires an annual letter from 80 years up, but some insurers require an annual letter from 75 years up.”
This is a requirement even if you have a valid driver’s licence. It is to make sure people are healthy enough to drive safely. You are required only to have your eyes tested when your driver’s licence is renewed, she adds. “Your ability to react quickly comes into play. Really, we need to know, ‘Is the person fit to drive?’”
A broker should tell you about this requirement when you are sold the policy.
Marius Neethling, the personal lines underwriting manager at Santam, says most insurers probably ask older people to prove they can still drive safely.
“Santam does not have an official policy regarding existing clients, but only for new clients 70 years and older.”
He says this is not a new underwriting requirement. “While the driver’s licence gets renewed every five years,” Neethling says, “it does not take into consideration the actual physical and/or mental health of the driver. A lot can happen to the health of a driver between renewal periods, especially in the case of older people, as their health can deteriorate quite rapidly.”
A 30-year-old, for example, with a debilitating illness does not have to produce a doctor’s letter annually, but Neethling argues that this is not discrimination against the elderly. “In essence, [a younger] person with a debilitating illness needs to do the same and advise the insurer of such a risk that would influence his ability [to fulfil his or her] ‘duty of care’ in terms of the policy contract.
“The insurer will then decide if specific underwriting should apply. It is also important to note that there is no way an insurer would know that a 30-year-old, for example, has a debilitating illness unless this is declared, and it is not common, while with the elderly, it is generally accepted that the risk of ill-health naturally increases.”
No matter how old you are, you must disclose all material facts to your insurer when applying for insurance and on an ongoing basis, Dawie Buys, the manager of risk at the South African Insurance Association, says. If you do not, the insurer could repudiate your claim on the grounds of non-disclosure.
“Material facts certainly include your physical condition and any changes in your health and physical condition which enable you to drive a vehicle in a safe mode, or not.”
Buys says the insurer can change the underwriting conditions – in essence requiring a doctor’s certificate on every renewal and not only when you first take out the policy.
“The insurer, however, must give the insured 30 days’ notice of such and any other change in writing,” he says.
WHY SHOULD YOUR PREMIUMS GO UP DESPITE YOUR CAR LOSING VALUE?
Why do your premiums increase annually when the value of your car drops each year, the elderly driver quoted in the article, left, who recently faced a 10-percent increase, asks. She has not made a claim and has never missed a payment.
Philippa Wild, the head of technical marketing at Discovery Insure, says the premium increases cover the expected cost of claims. The portion of the premium covering the total loss of your vehicle (the car is written off), which accounts for about 15 percent of claims, does decrease each year with the vehicle value. Unfortunately, about 85 percent of claims are for parts – following a crash or fender bender – such as a new door or bumper.
Wild says the insurer takes into account inflation and the value of the rand. As the rand drops, the cost of parts goes up, and this has a knock-on effect on premium increases. In other words, because of the recent steep fall in the rand, you can probably expect a higher-than-average increase in premiums this year.
Marius Neethling, the personal lines underwriting manager at Santam, says the biggest factor contributing to premium increases “is normally the deterioration of our currency, which impacts on importing vehicle parts”. Other factors are higher labour costs and increased accident frequency. “The value of a vehicle is only one of the many factors contributing to the rating,” he says.
Dawie Buys from the South African Insurance Association says although insurers adjust the market value of the vehicle annually on the revision date (anniversary of the policy) and they make provision for this when recalculating the renewal premium, there are other factors that affect the cost of insurance, such as the high accident rate, the increase in the theft of vehicles and the inflation rate.
“These increases may very well nullify any saving through the reduced value [of the car] and can still lead to an increase in the premium at renewal,” he says.
However, there is high competition among short-term insurers and you can often negotiate your premium, especially if you have at hand a lower quote from another insurer.
Insurers offer various enticements to get you to sign up. At least one, King Price, advertises on its website that your premiums will automatically decrease each year in line with the decrease in your car’s value.
But go cautiously, Buys says. “We always recommend that consumers shop around, but they must compare apples with apples to ensure that a new quotation is based on the same terms and conditions as the existing policy.”
* If you have a complaint regarding a motor claim, try to resolve it with your insurer or broker. If you are not satisfied, contact the office of the Short-term Insurance Ombudsman, Dennis Jooste, on 0860 726 5501