What carpooling means for your insurance

2013-08-11 14:00

With the price of petrol having just recently increased to R13.55 a litre in Gauteng and R13.18 on the coast, carpooling is something you could consider as a means to share travel costs.

However, if you do decide to carpool, you need to inform your insurer or broker immediately and find out what the implications are for your car insurance policy and premiums.

Types of carpool arrangements:

» Designated driver carpool: there is one driver who provides the vehicle and the passengers pay a weekly or monthly fare based on expenses such as petrol, maintenance and parking.

» Alternating carpool: several drivers alternate the use of their cars on a weekly or monthly basis. Each driver only incurs costs during the period when they are using their car for the carpool and no money is exchanged.

» Employer carpool: some employers encourage their employees to carpool by allowing them the use of company vehicles. The employees pay a fare which takes into account the maintenance, petrol and insurance costs.

Factors insurers will consider:

» Whether or not you receive payment from your passengers;

» If another motorist is driving your vehicle on a regular basis;

» The number of occupants being regularly transported as part of your carpool; and

» Imposed liability – your passengers should be aware that they will be unable to claim from you for bodily injury in the event of an accident, but will have to claim from the Road Accident Fund.

The effect on your insurance:

Lizette Erasmus, head of portfolio management at IntegriSure, says there are several implications.

» Your insurer could endorse your policy by increasing your insurance premium, imposing an additional excess amount for the increased risk, or change your cover from private use to business use;

» If you are the only driver and you are accepting money from all the passengers, you may find that your insurance policy excludes or suspends cover; and

» You may receive compensation from your insurer if you can prove that the money you accept from your passengers is only sufficient to cover your petrol costs and that you are not making any profit.

The ideal scenario:

The ideal situation, which makes most sense from an insurance point of view, is to carpool via an alternate driver arrangement.

For example, if you carpool with three other people from work, you each take turns to drive the others to work for one week of the month.

“In this case, no money changes hands and the majority of insurers will accept this arrangement,” Erasmus says.

“You may even find that your insurer may be willing to reduce your premium as your risk is reduced because your vehicle is not being used as often.”

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