Insure your vehicle for ‘designated driver’ use or risk losing pay-out

Hannes Smith, Head Personal Lines Sales & Operations at Old Mutual Insure.

We are officially 3 months away from the festive season and many of us are counting down the days to a long awaited holiday. However, with this season approaching, drinking and driving becomes a real concern. Please see below article from Old Mutual Insure around designated drivers.

South Africa faces a frightening dilemma with regards to drinking and driving. The World Health Organisation estimates that, of all the accidents that occur on South African roads, 58% are attributed to alcohol. The legal blood alcohol limit for driving on South African roads is currently at 0.05 grams per 100ml.

Despite efforts to promote road safety, there are still a large number of South Africans who continue to put themselves and others in danger, by getting behind the wheel after a night out. Old Mutual Insure urges South Africans to be responsible, by always making use of alternative transport services such as Uber and Good Fellows or take the tried and trusted ‘designated driver’ approach.

From an insurance perspective though, the designated driver philosophy could have significant consequences if involved in an accident. Drivers only consider their designated driver from a safety and sobriety perspective, and often don’t take the insurance implications into consideration.

“Take for example a young man in his mid to late twenties, who goes out for a night on the town with friends. He drives himself to his destination, has one too many and asks a friend to drive him home in his car. His friend agrees, but unfortunately crashes his car. The important question is, will the owner’s vehicle insurance policy be able to cover a designated driver in this situation?” says Hannes Smith, Head Personal Lines Sales & Operations at Old Mutual Insure.

When thinking about the term ‘designated driver’, the average person understands it in a very social sense: an evening out with friends and designating an individual to drive them home. However, under insurance circumstances, a ‘designated driver’ refers to drivers who have been named or noted as additional drivers on an owner’s insurance policy schedule and would therefore be covered should an accident occur.

“There are no special insurance policies or options available to designated drivers themselves. The insurance position of a designated driver depends entirely on the policy covering the vehicle in question. Vehicle owners need to name any additional drivers on their insurance policies, or implement an open driver policy. Under a policy that requires the stipulation of designated drivers, driving is restricted to those who are named on the policy, but under an open driver policy, anybody can drive the insured’s vehicle with permission,” explains Smith.

An unnamed ‘designated driver’ would therefore be liable for any damage caused if an accident occurs whilst driving a vehicle they are not authorised to drive as there would in effect be no cover.

In the case of a noted designated driver, the insurance implications are similar to that of the policyholder from a fault perspective. Should an accident occur that was not the fault of the designated driver, then a recovery would be done against the party that was in the wrong. If the designated driver is at fault, the claims process would be dealt with in the normal manner, just with a third party approach. The named designated driver, however, would be covered.

While named ‘designated drivers’ are covered by the insurance policy similar to how the policyholder is covered, designated drivers also have to comply with any of the terms and conditions of the policy. Therefore, they cannot drive whilst under the influence or allow another individual to drive in their stead. The consequence of this would be a rejection of the claim should there be any damage to the vehicle.

“Not many South Africans are aware of the nuances associated with ‘designated drivers’ from an insurance perspective. While it is encouraging to witness the initiation of a culture of responsible driving, it is similarly important for policyholders to understand and clarify the level of cover they have for their vehicles – especially when allowing a third party behind the wheel,” concludes Smith.