Car owners urged to have insurance before leaving the showroom

Dawie Loots, CEO of MUA Insurance Acceptances.

As soon as a vehicle has been registered in a car owner’s name, that car owner must ensure they have a motor insurance policy in place. Should they leave the showroom without insurance, the new car owner could face a huge financial headache and not be able to enjoy their new car.

This is according to Dawie Loots, CEO of MUA Insurance Acceptances, who states that the insurance risks for a newly purchased vehicle while still at the showroom are similar to those any vehicle faces, such as fire, storm, theft and accidental damage. “While a vehicle is in a showroom it is not under the control of its new owner and therefore might be exposed to additional risks, such as theft if the dealer does not have proper security measures in place.”

He says normally ownership passes over from the dealer to the car owner after a physical inspection is conducted by the owner, and dealers typically have insurance in place to cover a vehicle that is still on the showroom. “However, it is advisable that consumers arrange insurance cover from the time that the vehicle is registered in their name, which is normally a day or two before delivery is taken.”

Should the vehicle be stolen or damaged before it is collected by the owner, the dealer will most likely take on this risk, Loots adds. “In addition, should any damage occur during prerequisite vehicle tests the dealer is responsible as these tests generally have to be completed before the vehicle is delivered to the client and therefore ownership would not have passed yet.” However, it is best to check this with the dealer and confirm proper insurance cover is in place at all times.

He continues to add that should any damage occur while the vehicle is in the showroom, the claims procedure would be similar to a normal claim where the vehicle is already in the owner’s possession. “So it is important to provide enough information as possible to the insurer, including contact details of the dealer, possible witnesses, signed agreements and photographs. Depending on the type of damage, an insurer might request that the matter should be reported to the nearest police station.”

Loots explains that there are different types of insurance cover available to motor vehicle owners. “A motor vehicle owner is always advised to take out full comprehensive cover for their vehicle, as this will ensure that the car is covered against all risks at all times. Other options that may be considered, depending on the usage of the car, is third party cover only or comprehensive cover with the exclusion of accidental damage. Both these options will typically come at a reduced premium, but owners need to be aware of the consequences of taking out these restricted forms of cover as it is not advisable for a car that is used on a daily basis.”

When taking out motor insurance, it is extremely important that consumers provide full information to the prospective insurer when requested to do so, advises Loots. “This includes all previous claims, details of existing insurance cover, who the regular driver of the vehicle is, where the vehicle is parked during daytime as well as at night, and what the vehicle will be used for (business or private commuting). All these factors play an important role on how the insurer assesses the risk of taking on the client and the premium they will pay.”

Loots warns that if, at a later stage, it becomes known that any details have been omitted or are incorrect, an insurer might decide to cancel the policy or it might affect the outcome of a claim. “It is also very important to ensure that the insured value of the vehicle is correct and that it includes any extras that have been purchased, like a tow bar or sound system. Insurers typically insure a vehicle for either retail, market or trade value, so the advice of a broker can be of great assistance with this aspect.”

Depending on what type of cover is included in the motor policy, it might also be advisable to take out separate cover for rim and tyre damage as this is typically excluded from conventional insurance policies, says Loots. “Other useful types of insurance cover include cover for minor scratches and dents, extended warranties and cover to provide for a credit shortfall if the vehicle is bought in terms of a lease, motor vehicle loan or instalment sale agreement with a financial institution. The latter will provide additional cover in the event of the vehicle being stolen or written off and the amount due to the financial institution at that point is more than the insured value of the vehicle.”

When it comes to insuring a newly purchased vehicle, it is always best to seek the advice of an insurance broker as to what the best option is and to understand exactly what is and is not covered, concludes Loots.