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What you need to know about car insurance

Wednesday June 12 2019

Once you enter another country, you will need

Once you enter another country, you will need to extend your cover, be it comprehensive or third party. PHOTO | FILE | NATION MEDIA GROUP insurance

Baraza JM
By Baraza JM
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There has been a whole lot of talk surrounding insurance in my circles these past few days.

It started off with my everlasting curiosity over what "excess" is, before being followed by the need for Comesa insurance once one drives across an international boundary in the lesser East African region (I am not sure what the drill is as far as the greater East African region and beyond are concerned, but let's deal with these one at a time).

The need for this Comesa knowledge stemmed from our latest Great Run adventure, the 15th installment, from which we have just returned, craftily named "Great Run XV: My Accent Changed".

The name should be a dead giveaway - our second three-day event saw us cross the boundary at Namanga and drive South into the union of Tanganyika and Zanzibar, commonly referred to as Tanzania, as far down as Moshi, round Mt Kilimanjaro via a lovely twisty road between Himo and Tarakea and back into Kenya through Oloitoktok.

This is a story for another day, but the long and short of it is that one needs Comesa insurance over and above whatever homegrown cover you already have for your car.

ARSON

And then there was Malik Heights. It would have been dismissed as just another building fire in this metaphorically heated city of ours had it not been for the presence of a car dealer forecourt close to the ground level of that high-rise building, an outlet that dabbled in the sales of transport solutions to high net worth individuals.

Those cars immediately caught the attention of observers, attention that may have been unwanted because immediately thereafter arose speculation as to the genesis of the fire: arson.

Please note this is purely speculation* and is by no means authoritative; I'm just going by what is doing the rounds on news channels and social media as of the time of writing.

The car dealer may have run afoul of one or more governmental institutions that deal with taxation and registration of motor vehicles, and these institutions intended to make their presence felt in two shakes of a lamb's tail.

Not so fast, hombres, someone enterprising listened to Marshall Mathers and decided to rock up with a can full of gas and a hand full of matches (and he was found out) to destroy what I presume is evidence (the exact details of how this was done, if it was done, remain murky, but flow with me here for a minute); the evidence being the inventory at the yard.

Such a shame that they had to set a building on fire along with it. This promptly throws a spanner into the speculative works.

LOSSES

Dodging taxes and registration fees is one thing, setting a high-rise building while at it is another.

Not just that, another fantastic fact is the value of the now-crispy inventory: estimates of $6 million dollars are being bandied about.

That's not chump change, it translates to 600 million Kenya shillings, or 600,000 of our soon-to-be-defunct 1,000-shilling notes.

That is a lot of bread, and if it is what needs to be destroyed, what kind of cheese are we looking at in play here? Good lord, I haven't been working hard enough.

(News developments indicated that a suspect had been caught by Big Brother's unsleeping, unblinking eye; and there is CCTV footage of a man deliberately setting the place ablaze.)

That said, deep discourse on the matter brought forth the aspect of insurance, which is in keeping with today's theme.

I naturally had to hit up some of the people I know in insurance to answer the questions I may have had, while deftly sidestepping controversial material in the process - and this right here is the result: a demystifier.

1. Unabeba "Excess"

Well, it may sound a bit off-key, but this an exact quote from my contact: "It is assumed by many people that once they (get comprehensive cover for their car) and pay premiums religiously, they will never have to part with any money in case something happens to the vehicle and they have to make a claim.

"However, this is not usually the case because you will still have to settle a percentage of the claim while the insurer pays the rest. The amount that you will pay out of your pocket towards the claim is what is referred to as excess"

The emphasis is his. Two things immediately stand out: the word "assumed" in the first part of the treatise and the word "usually" in the second part.

There is a famous quote about assuming making "asses" out of "umes" or something along those lines, but the gist of it is this: always read the fine print before signing on the dot.

You had better know exactly what you are getting into to prevent awkward and potentially heated (pun intended) moments come claims-time; which then leads us to "usually".

EXCESS

The use of that descriptor implies that there are exceptions to this, and there are. We will get to them shortly. First, we need to define what this excess is and why it exists.

"Excess is an amount/cost borne by the insured in the event of a loss and is the uninsured portion of your loss."

Thus spake my contact. He is kind of stating the obvious here, plus I thought insurance cover is "full". What is this about an "uninsured portion"?

This is why one needs to read the fine print. It turns out the cover is not 100 per cent, it only activates beyond a certain amount below which you are on your own.

Excess is applied to quell frivolity and inculcate a sense of responsibility in the client, an approach I fully agree with.

Insurance companies cannot be fronting for every scratched bumper or minor fender bender when they have total write-offs to work on as well.

And all too frequently I have heard the phrase "Insurance italipa!" (Insurance will pay!) gleefully hollered at or by someone who is being deliberately reckless with a motor vehicle; a phrase that causes my hackles to rise in irksome bother at the very sound of it.

RESPONSIBILITY

By refusing to pay for relatively insignificant repairs, clients naturally tend to be more careful with their property while the insurance company governs its overheads in one fell swoop. This means that claims made are more or less legitimate or at least deserving of their attention.

There are various types of excess, and my contact warns that you may find yourself paying for more than one type when you make a claim (further disincentive to be flippant about your car):

1. There is own damage/accident excess, a.k.a "standard driver excess", which is a fixed figure you need to pay against your claim.

This figure is based on the age and experience of the driver, as well as the usage of the vehicle (private or commercial)

2. Theft excess: this is self explanatory, really. Your car was stolen? Pay us first before we pay you.

3. Third party excess is what you will pay if you damage other people's property (the OPP? Ey, you know me!) in the course of having an accident.

4. Age/experience excess is the amount you will pay for being younger than 21 or having had less than two years' driving experience when you crashed.

REPAIR BILL

That means on a bad day, you could be a 19-year old driving a pickup and wind up taking down someone's fence in which case you may find yourself paying for three out of those four types of excess.

The drill is this: you crash. You get a police abstract which typically specifies who is to blame for the incident. If it is you, the excess rules take effect.

The insurance company will quantify the damage into comprehensible currency figures and any damage whose value is below the excess threshold will be paid for by you.

Anything beyond that will be handled by the insurer (of course, after they having deducted the excess amount first).

No blame no excess means if the accident is not your fault then the insurance company will foot the entire repair bill (100pc).

There is something called excess protection which keeps you from paying that excess amount when the unimaginable happens, and the more I read it the more confusing it sounded; but it boils down to this: you can pay some more money upfront so that you don't have to pay any money if or when you wreck.

This would be handy, I presume, for inexperienced 19-year olds driving pickups; if such a demographic exists in any noticeable amounts. My contact wraps up his treatise thusly:

"It is therefore a prudent risk management measure to transfer the excess risk to the insurer, and avoid having to pay out of pocket in case incidents arise."

THIRD PARTY

Or... just don't have an accident, especially if young, inexperienced and palming a vehicle that requires an annual inspection sticker.

- The contact here is Mr Simon Ngui, a motor insurance expert from Minet Risk Solutions

2. Comme Çi, Comesa

This one was explained by a different contact, a lady, who may or may not moonlight as a gynaecologist but still knows her way around an insurance policy.

The concept for the Comesa insurance cover is fairly straightforward: it is more for legal reasons than actual need for insurance cover since, telltale alert, it is only available in third-party cover form; though this third party cover still is some form of cover.

The insurance cover you have currently, be it comprehensive or third party, is restricted to within the country's borders.

Once you enter another country (more often than not within the same trading bloc, the bloc in our case being the Common Market for East and Southern Africa, Comesa), you will need to extend this cover because I don't think there is any country on earth that allows uninsured vehicles on its roads.

The extension of the cover from country-specific to Comesa-general is purely third party irrespective of your original cover.

That means a comprehensive cover does not apply if you wreck or get yours stolen out there; you have to tow the vehicle back to your home country to enjoy the benefits of the cover.

However, you can still get comprehensive cover while abroad, but you will have to do it while there (having already taken the Comesa cover since you cannot cross the border without it).

The contact here is Dr Njoki Fernandes, a well-respected physician who is not actually Cuban as the surname might suggest.

3. The Roof! The Roof! The Roof Is On Fire!

And so were the cars, if you were at Malik Heights last week. Over and above the back stories involving that unfortunate flame, there is the question of what happens in such a case.

We don't have the space to fully delve into the processes, so we will have to call it a day and promise to continue this discussion next time. Have a lovely and fully covered Wednesday

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