Truck insurance

Are you getting what you pay for?

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All the clichés are there. ”Service when you need it most”, “Cover that you can count on” and, the old and possibly the most (in)famous, “We don’t hassle, we ….”

So why then, when you speak to truck owners, are the tales of woe all the same – insurance pay outs that don’t meet their expectations? This can happen as a result of many reasons but one of the greatest issues facing vehicle owners at the time of a claim is that their vehicles are worth more to them than what they get paid when the vehicles are written off.

This is a double edged sword. The price of repairs and spare parts outstrip the price of brand new vehicles by up to three hundred percent in some instances, which results in accident damaged vehicles being too easily regarded as being “uneconomical to repair” when they are very far from being constructive total losses.

This is because their sums insured, based on market or retail value, is not sufficient to cater for repairs to be carried out. This situation is further exacerbated by the vehicle owners not being able to have first right to retain their wrecks even if they do bid the highest price. However, if you insure for what you regard as being a sufficient value to cater for repair costs, you will only be paid out a much lower market or retail value as most insurers define in their policy.

So the question often arises: What am I paying for?

To combat this, our insurance facility with Lloyd’s of London offers vehicle and fleet owners the option of insuring at true agreed value: “the sum insured reflected in the schedule shall form the basis of the settlement of the claim”. This means that the vehicle can be insured at sufficient value to cater for spiralling repair costs without being written off or, in the event of a write off, a reasonable payout is made.

For example the value of a 2010 refrigerated trailer may retail at R500 000 but that is based on depreciation and you cannot  purchase a second-hand “box” in the event of an accident while a new box with an aluminium floor will cost you R380 000.

So a badly damaged box – with no other damage to the rolling chassis and cooling unit – will result in a write-off and you will receive R500 000 less your policy excess which will not be sufficient to put you back on the road. And most insurers will retain the wreck.

To allow sufficiently for repairs without writing off the trailer, the sum insured can be R900 000 to allow for the rolling chassis @ R200 000, the box @ R380 000 and repairs to or a reconditioned refrigeration unit @ R300 000 (or new at R500 000). In the event of a write-off however, you will still be paid out R900 000, less your policy excess.

The intention of insurance, within reason, is to place you in the same position after the loss as you were in immediately prior to the loss. With agreed value you can do this.

 

In addition, you, the vehicle owner, are paid the cost of repairs directly, not the repairer. You can therefore settle with the repairer once you are entirely satisfied that your vehicle is in the same condition that it was prior to the accident.

In the event of a write-off you have the option to retain your wreck and your settlement is also sufficient to cater for the outstanding finance on the vehicle, without having to buy TOP UP insurance.

Leon de Villiers, Director at SKY TIV Promark Insurance Brokers

 

PULL QUOTE: “This situation is further exacerbated by the vehicle owners not being able to have first right to retain their wrecks even if they do bid the highest price”

 

BOX: Did you know?

Methods for transferring or distributing risk were reportedly first practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen or lost at sea.

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