Without your wheels
Being without your car can be extremely frustrating, depending on your circumstances. Many people rely on their cars to get them to their place of work, while some cannot do their jobs without a car. What happens if your car is damaged in an accident, or even worse, stolen? Luckily you have insurance and the insurance company will take care of it...or won’t they?

With car insurance it is very important to establish exactly what is included in your policy and what not. You may be under the impression that, as you have taken out comprehensive car insurance, your insurance company will pay for the rental of a car while your car is being repaired after an accident, or after your can has been stolen.

Depending on how serious the damage is to your car you may be without your wheels for a month or longer. When a car is stolen most insurance companies have a waiting period; this is to give the police time to recover your car.

Read the fine print
Please read the fine print on your car insurance policy – having the use of a rental car is not automatically included in all comprehensive insurance car policies, but is available as an optional extra. You will therefore pay an additional premium should you require this service. So, first you need to decide if you really need this additional cover. If you have other transport available you could consider going without this additional cover and by doing so, decrease your monthly insurance premiums. Even when you do have this cover there will be a limit to the period that the insurance company is prepared to pay for the rental car.

Roadside Assistance
Insurance companies often have special benefits that form part of comprehensive or third party, fire and theft cover. One of the most popular is roadside assistance after an accident or breakdown. Roadside assistance usually also include car hire, but this is not to be confused with the car hire we described above. Roadside assistance will only cover the cost of a rental car for 24 hours in most cases, just to get you back to your home should you be some distance away.

Car hire – know the pitfalls
When you do have to hire a car, such as on a holiday trip or business away from home, there are some car insurance implications that you need to take note of. This is an area that has caused great confusion with the public. The Financial Services Board that regulates the short-term insurance industry in South Africa does not allow car rental companies to sell insurance policies as they are not licensed in terms of the Financial Advisory and Intermediary Services Act (FAIS.) The implication is that should you cause damage to, or write off a hired car, you could be fully liable to the rental company for the loss or damage.

Rental companies should therefore take out comprehensive insurance policies for their fleet of cars. However, due to the high risk insurers are not likely to take on this cover; if they do the premiums would be very high. Many of the big operators in the car rental industry therefore carry their own insurance risk. To make car hire services accessible to the public most of these companies will let you sign a “liability waiver” and the terms thereof vary from company to company.

Is it insurance or not?
Currently most of the terms and conditions of car rental companies still include that you are paying for insurance, while, according to law, they cannot sell insurance! It opens a whole can of worms, as the car rental company is charging you for “insurance” to protect you against claims should you damage or write off their car. The conditions also vary from one rental company to the next, for example some will include third party claims and others not. Often they also provide you with no cover for Personal Accident insurance as they rely on the cover offered by the Road Accident Fund.

Very few cover you when driving on gravel roads, so remember that too, next time you use a rental car in the game parks. Currently there are excesses payable just like on “normal” car insurance. So, legally you can refuse to sign an excess waiver when renting a car in South Africa; as a South African citizen you will have to provide the rental company with proof of your own comprehensive car insurance. However, car rental companies will refuse to rent out a car to international drivers without the purchase of their excess waivers.

This whole scenario is under investigation by the Financial Services Board at the moment. Some companies already refer to the charges for accident and/or theft cover as fees and state that it is not insurance. Until there is clarity on the issue we suggest you read the terms and conditions very carefully before signing a car rental agreement.