Pay As You Drive Motor Insurance

Why should you pay more for motor insurance simply because you use your car for business purposes? Many business owners travel less than an employee who travels in peak traffic on congested roads to their place of work. So why should the business owner pay a higher insurance premium? The good news is: With Hollard's Pay as You Drive policy, you pay for the distance travelled, not the reasons for the travelling!

Many business people are in fact clocking up fairly low kilometres

The mileage monitoring that goes with Hollard’s Pay As You Drive motor insurance has blown a motor insurance underwriting assumption out of the water by proving that the ‘business use’ premium loading is often based on a false premise because business people do not all travel further than private vehicle users.

“Before advanced onboard GPS technology gave Hollard a choice, we did what other motor insurance companies do and that is to make assumptions and group people into risk categories.

“One of these groups was people who drive cars for business use. The assumption here was that all business people drive further than ‘private’ users and are therefore exposed to greater risk of accident and theft,” says Zuriel Naiker, Communications Manager at Hollard Insurance.

“This assumed greater risk can carry a premium loading of up to 30% ... and sometimes more. But Hollard’s Pay As You Drive, with its accurate and automatic monitoring of monthly mileage, is proving that many business people are in fact clocking up fairly low kilometres.

“Many business people also use a company car so that their own car is used rarely for business or at weekends. With Hollard’s Pay As You Drive there is no ‘business usage loading’ at all because the focus is on how far you travel and not why – and that’s fair.”

Technology adds benefits

So drivers, both business and private, are reaping new and revolutionary financial rewards and handy services made possible by advanced GPS technology both in lower premiums and other advantages.

Naiker explains that the monitoring device fitted to a vehicle automatically monitors mileage which opens up new opportunities to offer additional services to motorists:

• Fair and transparent premiums for low mileage users, calculated on actual kms travelled
• The less you drive the less you pay
• There is no ‘business loading’ payable with Pay As You Drive because the emphasis is on how far you travel and not the reasons why. Usage has become a non-issue.
• Drastic drop in premium for car owners during periods that they are on holiday without their vehicle
• Tax advantages of having electronic log books available online, accessed through a personal password
• Travelling expense claims are easy to prepare from these online automatic log books
• Evaluating the level of car usage by various family members is also possible through these online logbooks
• The ability to monitor the whereabouts of a car at any time of the day or night can put minds at ease – especially parents with driving age children
• The device is also a tracking system for vehicle retrieval
• There is a panic button inside the car
• Calculating petrol consumption is made simple

What took so long?

It’s about technology, says Naiker. “It is only because of advances in GPS technology that Hollard has been able to design this fully automated Pay As You Drive motor insurance which brings a really fair deal to people who drive less ... and with 21st century style online benefits which were never possible before. Fully automated Pay As You Drive is one of Hollard Insurance’s recent industry firsts.

“Many motorists travel as little as 10 to 20 kms a day. So from a fairness point of view, why should these short-distance drivers pay the same premium as those who travel ten times that distance every day? Thanks to new technology they don’t! “

Do you want to save money on your premiums? Want to get a top of the range GPS enabled Tracking System? Get a quote on Hollard's Pay As You Drive Policy NOW... Click Here, E-mail us your contact details & we'll call you back.

Motor Insurance: Business Use or Private Use

It may be necessary to take on a fully-fledged commercial policy

Many entrepreneurs are unaware of the need to inform their insurer when they begin using their vehicle for business purposes.

Lourens Joubert, Head of Commercial Underwriting at Santam says, “Whether you are starting a big business, a working mom starting a small home industry, or an estate agent, and you are using your car for business purposes you need to inform your insurer to update your car insurance policy.

“Depending on the extent of use, you may be able to retain your personal, non-commercial, policy by adding cover for business use, or it may be necessary to take on a fully-fledged commercial policy.”

Joubert says by using a vehicle for work purposes, in addition to usual use, means a driver is clocking up more kilometers, spending more time driving in congested traffic and therefore increasing risk, as they are more likely to be involved in an accident.

“Obviously the frequency of business use and the type of business will need to be taken into account as well as whether or not the vehicle is being used by an employee.

“Employees are not covered under the standard commercial motor policy if death or bodily injury should arise from the course of their employment. Compensation for such a loss is payable by the Compensation Commissioner under the Compensation for Occupational Injuries and Diseases Act (COIDA).

“However”, Joubert adds, “should the accident occur before or after working hours – therefore being outside the scope of their employment, the commercial motor policy would cover the claim in circumstances where the insured is legally liable for the accident.

“COIDA will also grant compensation for employees who are provided with free transport to and from work by their employers, provided that the vehicle is driven by the employer or one of their employees.

“An employee is obliged to first lodge a claim for compensation in terms of COIDA, and may then approach the Road Accident Fund (RAF) for any further compensation. The RAF will only pay out over and above the COIDA payment, not in addition to it.

“Passenger liability cover, other than for employees or members of the insured’s own household, for private vehicles or vehicles with a carrying capacity of less than 1 500kg, is usually included under the standard commercial motor policy. Owners of vehicles falling outside this description can purchase passenger liability cover for an additional premium.”

Joubert concludes: “Many entrepreneurs forget or are unaware of the need to transfer their personal policies to commercial policies when starting out. If a business owner or employee is using their vehicle for business purposes, it is best to consult a broker to advise you on the best policy to suit your needs.”

Things start to get a bit hairy in the short-term insurance world

There are a whole lot of things going down in the short-term arena at the moment, that are bound to leave many players thinking... EISH!

Crime levels (although according to our government, the high crime rate is just a perception, not so?) and flood damage certainly won’t help claims ratios (i.e. premium : claims).

The possibility of a further interest rate hike this month will also exacerbate the knock-on effect the motor trade has felt with a slowdown due to the New Credit Act and registration system problems. (Speaking of which, do you know what e-Natis stands for? Eish Not Available Today Sorry!)

South African vehicle sales during July fell 6.4%, or 3 596 units, to 52 879 units compared with 56 475 new vehicles sold during same time last year, new sales data showed on Thursday. Sales statistics from the National Association of Automobile Manufacturers of South Africa (Naamsa) showed, however, that the decline was substantially less than that seen during the previous months. During June, sales fell a massive 12.1% to 50 056 units. Maybe early signs of a slight recovery?

And on a similar note:

South African short-term insurer Mutual & Federal posted an 11% decline in headline earnings per share to 187 cents in the six months to end-June as claims increased, the company said on Thursday. The company cited a substantial increase in the incidence and severity of large commercial fires, motor vehicle claims and extensive weather-related losses following storms in Gauteng province in January and KwaZulu-Natal in March.