Uber drivers at high risk of being rear-ended by insurers
The cost of insurance means Uber and Taxify drivers often find themselves out in the cold
About two-thirds of SA vehicles are not insured – and if you consider what it costs to insure a car, especially if you, your car or both are considered “high risk”, that’s not surprising.
If you’re high risk you can keep your premium relatively low, but at the expense of a very high excess.
As high as R40,000, would you believe, in a car used as a Taxify car – more on that later.
A few weeks ago I got a ride from OR Tambo airport to a conference venue in an Uber owned and driven by Lungile Matandela.
As we chatted, it emerged that in July his Toyota Corolla Quest was hit from behind as he was stopped at a Randburg intersection by a man in a luxury German sedan, who was clearly not looking at the road.
He paid a R7,500 excess, and lost the use of the car for three months while it was being repaired, which meant he didn’t earn an income and fell behind in all his payments, including his R5,800 Wesbank car instalment.
“Wesbank is now demanding immediate payment of R26,000 from me,” he told me, “and I can’t pay it, so I’m probably going to lose this car and then I don’t know what I’m going to do.”
So I got hold of Wesbank and asked if they would accept a payment deal – Matandela would commit to paying R10,000 a month until the arrears were settled.
I’m happy to report the Wesbank agreed to the deal, so Matandela remains behind the wheel.
But I had more questions. Doesn’t the Uber business model include making or facilitating a plan for those drivers whose cars get damaged?
Alon Lits, GM of Uber Sub-Saharan Africa, said the company focused on “ensuring that our [car owner] partners have access to the best possible insurance deals in the market.
“We ensure that vehicles have comprehensive vehicle insurance but additional policy extras – such as car hire – is their choice.
“We allow them to swap out vehicles in these scenarios.”
The story got very interesting when I attempted to find out why it took three long months for the panelbeater to repair Matandela’s car.
He told me the panel shop had told him there was a delay in sourcing spares.
Not so, Toyota SA told me. Orders for three parts were made in August and September, and the parts were supplied on the same day or the day after.
The insurer, Lion of Africa, revealed the claim was processed “in good faith” because Matandela had just taken out the policy and his first premium hadn’t yet fallen due when the accident happened.
“He has not paid premium and the policy has thus been cancelled, which may require us to initiate recovery action against the client.”
So a new crisis looms.
Matandela admitted he hadn’t paid his premiums as he’d been forced to pay that hefty R7,500 excess.
Lots of lessons here – pay a higher premium for car hire; never fall behind in your premiums; and, if you’re told that your car repair is being held up due to a delay in parts, check with the manufacturer.
In the same week, I got an e-mail from Taxify car owner Simphiwe Mntambo.
She insured her VW Polo with MiWay in June for a premium of R1,600 a month and excess of a whopping R40,000.
“I was trying to keep my premiums as low as possible,” she said.
So here’s what happened: a MiWay assessor estimated the repair to be R17,000 and told her she’d have to fund it herself, providing her with a list of their approved panel beaters.
Mntambo gave one of them the job and made a plan to pay that R17,000.
But the panelbeater twice came back to her to say they found additional damage, and that R17,000 became R23,000 and then R31,000.
She’d paid a R15,000 deposit when she turned to me for help.
“MiWay has offered no help and I continue to pay for the insurance, on a car that has not been generating an income for a month and a half; and the panelbeaters have been increasing their costs unexpectedly, expecting me to pay,” she said.
I took up the case with MiWay, mainly questioning the quote-creep issue. “Does MiWay inform their clients – who are forced to fund their repairs because of very high excess amounts – that their assessor’s repair estimate may be grossly inaccurate?”
Happily, MiWay responded by taking Mntambo’s R15,000 repair deposit as an excess and funding the rest of the repair, and the car is back on the road.
“We concluded that the client may not have fully understood the implications of the lower premium/higher excess structure and, due to the importance of the vehicle for her work, we decided to give her the benefit of the doubt.
“We have further looked into the additional/unseen damages that were only picked up after the repairs, and confirmed that these were accident-related.”
That doesn’t quite answer my question about disclosure, but Mntambo is grateful that her financial crisis is over.
MiWay’s underwriting criteria allow for excesses of up to 30% of the sum insured.
“We have a total of 496 policies in force on Uber and Taxify vehicles in which the excesses are equal to or above R20,000,” the insurer said.
“However, our average excess amount on these risks amounts to R13,300.”
Bottom line: beware the very high excess – given the chance of an accident claim, the lower premium is very high-risk.