CAPE TOWN, South Africa -With current fuel prices, drivers are finding ways to reduce their consumption as much as possible and one of those ways might be to carpool.
Yet, have you read your insurance policy – better still check with your broker – to determine what is allowed and what is not allowed in this particular scenario because the buck you’re saving now could turn into a major loss should something happen.
Most insurance policies have limitations that could result in the repudiation of a claim if you are not complying with the contract. The CEO of MasterDrive, Eugene Herbert, provides 10 facts to keep in mind if you are, or plan on, car-pooling.
FOR THE INDIVIDUAL
1. There are various ways to carpool and each one can have its own unique effect on your insurance.
2 If one person is the driver all the time and is reimbursed for the cost of the trip including fuel and maintenance many insurers need to be aware of this but may not change your premium as you are not profiting from the arrangement.
BE CAREFUL WITH PAYING PASSENGER
3 When you do make a profit from carpooling it’s considered to be a commercial transaction. Your insurance policy may change to a business policy, increase your premiums, or no longer cover you if they have not been informed and you are in an accident.
4 Personal policies also do not assume liability for fare-paying passengers.
5 Alternating drivers, where no money exchanges hands, is often the least risky option but insurers still need to be informed. Bear in mind your policy may cover only designated drivers.
TELL YOUR INSURER ABOUT OTHER DRIVERS
6 In some instances, insurers may even reduce your premium (if they don’t offer then ask) because you are driving less.
7 If you use your vehicle all the time but you allow others to drive it, do not forget to list them as secondary drivers with your insurer.
FOR THE BUSINESS OWNER
8 If a company allows employees to use a fleet vehicle for personal travel you might have to tell your insurer or broker.
9 Your insurer – in the case of companies – might have requirements if vehicles are kept overnight at your home. Again, check with your insurer.
10 In each case you might also require licensing if you make a profit from passengers. In terms of government legislation, you would be carrying passengers for reward.
THE KEY? TELL YOUR INSURER
It varies between insurance policies so the first step before making a car-pooling agreement determine what your policy allows.
“It’s essential to check in with your insurer regularly if anything changes with how your car is used – carrying passengers can – and most probably will – affect insurance premiums.
“Not telling your insurer might result in a much bigger loss than a higher premium.”