Brokers can add value in vehicle-sharing initiatives

SHORT-TERM brokers are in pole position when it comes to adding value for motor-insurance policyholders who are confused about the implications of vehicle sharing arrangements.

Mutual & Federal, a product innovator that includes vehicle-sharing provisions in its popular Allsure policy, says growing interest in vehicle sharing initiatives creates a need for consumer education and support - roles for which short-term insurance advisers are ideally suited.

Sedick Isaacs, General Manager, Personal Business at Mutual & Federal, says: "Our general advice to consumers is to consult their brokers as the issue of vehicle-sharing is far from clear cut. Product structures differ across the insurance industry and definitions of cover may change in various product ranges."

For peace of mind, consumers have to establish whether they have appropriate cover in the event of injury to passengers or damage to the vehicle in situations where multiple passengers are being carried.

Isaacs adds: "This is an opportunity for brokers to reinforce the relationship with their clients. Obviously, a review of motor insurance needs from a vehicle sharing perspective may also create opportunities to write new business and channel motorists to quality products that provide for these contingencies."

Vehicle sharing arrangements came under the spotlight after the high-occupancy vehicle lane experiment on the N1 between Johannesburg and Pretoria at the end of 2006. The Gauteng Department of Transport and Metro Police combined efforts for this initiative to ease congestion by reserving the right hand lane exclusively for use of vehicles carrying a minimum of three occupants.

Mutual & Federal applauds all efforts to ease congestion and reduce the incidence of accidents; factors that contribute to a continual pressure on the insurers book of motor business. 

"Offering a lift to a friend or colleague is often the socially responsible thing to do," says Sedick Isaacs. "But the consumer should not simply assume that motor insurance cover is in place.

"The most sensible response is to check the policy wording, with expert input from professional intermediaries when clarification is needed.

"Cover for carrying passengers depends on the insurer and the specific provisions of each product."

Mutual & Federal's Allsure policy allows vehicle-sharing for social purposes and the giving of lifts. This includes commuting, but the 'use' section of its policy makes a distinction between private and commercial usage.

The cover remains valid when the driver is reimbursed to cover petrol and costs, but if the payment includes a profit element, the vehicle usage has changed from 'personal' to 'commercial'. Additional commercial cover may then be necessary.

In practical terms, the Allsure policy allows private individuals to share motoring costs and reduce congestion, but as soon as they try to make a profit, cover is no longer appropriate and commercial cover will be required. 

It may be "necessary and useful" for brokers to help clients understand the distinction between commercial and private use, says Mutual & Federal.

An important message for advisers to communicate is that checking policy details and exclusions after an accident has happened is not a wise thing to do.

Isaacs adds: "Proactive brokers will add a lot of value. The vehicle-sharing debate is another issue that spotlights the pro-consumer role of the professional adviser."