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Check your policy for vehicle-sharing cover Mutual & Federal

01 February 2007 Mutual & Federal / Clear Distinction

PRIVATE motorists joining car-pools should double-check their insurance policies to make sure they are covered in the event of injury or damage to the vehicle in situations where multiple passengers are being carried.

This consumer education tip comes from Mutual & Federal, one of South Africa's leading short-term insurers and a product innovator that includes vehicle-sharing provisions in its Allsure policy.

However, product structures differ across the insurance industry and definitions may change in various product ranges, says Sedick Isaacs, General Manager, Personal Business at Mutual & Federal.

Car-pool arrangements have come under the spotlight following the high-occupancy vehicle lane experiment on the N1 between Johannesburg and Pretoria. Under the Department of Transport and Gauteng Metro Police initiative to ease congestion, the right hand lane was reserved for the exclusive use of vehicles carrying a minimum of three occupants.

Mutual & Federal applauds efforts to ease congestion and reduce the incidence of accidents; factors that contribute to a continual rise in repair cost pressures 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. Check your policy wording. You may be covered for carrying passengers, but depending on the insurer and their specific product, you might not."

Mutual & Federal (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 be necessary.

In practical terms, this means private individuals can co-operate to share their motoring costs and reduce congestion, but as soon as they try to make a profit, they need commercial cover for their vehicles.

Isaacs adds: "All consumers are well advised to consult their short-term insurance adviser if they are unsure about the distinction between commercial and private use or do not know precisely what covers are in place on their motor insurance.

"You don't want to be checking the details after an accident has happened. Put your mind at rest now: especially as the holiday period will soon be upon us, traditionally a period when the road toll mounts."

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