Motor insurance or auto insurance is a policy intended to protect you against the risk of loss or damage to your vehicle and the consequential liabilities that may arise.
There are three different types of motor insurance in the Kenyan market. These are:
The Insurance (Motor Vehicles Third Party Risks) Act makes it illegal for the owner of a vehicle to use or cause or permit any other person to use a motor vehicle on a road unless the vehicle has third party insurance.
In Third-Party insurance, your insurance plan covers injuries sustained by pedestrians and other passengers in your vehicle (excluding your family) as well as damage to their property e.g. other cars on the road.
Third-Party Fire & Theft
This type of motor insurance extends Third-Party insurance to cover fire and theft of the insured’s vehicle. An excess may be applicable. An excess is the first portion of an insurance claim that the insured is responsible e.g. the insurance company may impose an excess of 10% of the value of the vehicle in the event of theft. This would mean that the insurance company would only you 90% of the value of the vehicle in the event of theft.
Comprehensive Motor Insurance
Comprehensive insurance extends coverage to include accidental damage to the vehicle. This is the most superior form of motor insurance hence the use of the term “comprehensive”. However, the scope of coverage will differ from company to company. Some companies now provide coverage extensions that include:
- Emergency medical expenses reimbursement (For full coverage see our medical insurance page)
- Costs for protection, recovery and removal of the car from the accident scene.
- Excess protection.
- Political Violence and Terrorism.
- Replacement Car.
- Air and Road Ambulance.
- Membership of AA Kenya
Excess in Motor Insurance
As with all types of insurance plans, motor insurance comes with excess. An excess is the first portion of the loss that you payable by you, the insured. For example, below are a few examples of excess in motor insurance:
- 2.5% of the value subject to a minimum of 10,000 for accidental damage: This means that in the event of accidental damage on a vehicle valued at 1Kes million, the insurer would only be liable to any damage over Kes 25, 000.
- 10% of the value in the event of theft where the vehicle is fitted with an anti-theft device: The insurance company, in this case, would pay you 90% of the value of the vehicle in the event the vehicle is stolen.
- 20% of the value in the event of theft where the vehicle is not fitted with an anti-theft device: The insurance company, in this case, would pay you 80% of the value of the vehicle in the event the vehicle is stolen.
- The above are just a few examples of how excess applies in motor insurance. You can read more about excess at our blog post titled How to Avoid Motor Insurance Excess.
Determining the Value of a Vehicle for Comprehensive Insurance
To avoid disputes at the point of loss, most insurance companies use valuation services to determine the value of the vehicle. The cost of the valuation service is usually borne by the insurance company. In addition to determining the insurance value of the vehicle, the valuation also ascertains the roadworthiness of the vehicle and helps the insurance company to decide whether to accept the vehicle.
Motor Insurance Claims
There are several scenarios that can give rise to a motor insurance claim, they include;
Third-Party Injury and Property Damage Claims
A third party is another road user either a pedestrian or the occupant(s) of another vehicle(s). Injuries to such people are referred to as third party injuries. If you are to blame for the accident, you become liable for injuries caused to third parties. Once you report the accident to your insurance company, they take up the matter and their lawyers represent you in any legal proceedings. Should a legal award be made against you, the insurance company pays the award up to the limit of your third party personal injury (TPPI) limit on your motor insurance policy.
In addition to third-party injuries, a claim can also arise out of damage to third-party property. This includes other vehicles on the road and any other property. If you are to blame for the accident, you become liable for damage to other vehicles on the road and other third-party property. Once you report the accident to your insurance company, they take up the matter and their lawyers represent you in any legal proceedings. Should a legal award be made against you, the insurance company pays the award up to the limit of your third party property damage limit on your motor insurance policy. It is important to ensure your third party property damage (TPPD) and TPPI limits are adequate.
Take a scenario where you get involved in an accident. Assume your TPPD limit is only worth 3 million yet the third-party vehicle, a large expensive car valued at 20 million, is completely damaged/written off. If you are found to blame, you would be liable to pay 20 million. But, you would only have insurance for 3 million. In such a scenario, once the matter has gone through legal proceedings, you would have to raise the difference of 17 million. Let’s stretch the example further and assume the vehicle had 4 occupants who all lose their lives and the court makes an award of 5 million per person making a total of another 20 million. If your TPPI limit per occurrence is only fixed at say 5 million, you would need to cough up an additional 15 million bringing your total uninsured loss to 32 million (17 plus 15). Many people do not realize the implications of taking out motor insurance with low third party injury and property damage limits. Such a decision can easily bankrupt you.
Theft and Accidental Damage Claims
Theft or damage to your vehicle would also give rise to a claim provided you have taken out third party fire and theft insurance or comprehensive motor insurance.
Claims Under Motor Insurance Extensions
If you have comprehensive motor insurance, then it is likely that you have extensions that provide increased coverage up to a specified limit. Some examples of extensions include:
- Loss or damage incurred as a result of political violence and terrorism.
- Damage or theft of the car entertainment unit.
- Damage to the windscreen and window glass.
- Damage or loss of personal effects following an accident.
- Cost of emergency medical expenses.
- Replacement car during repairs.
- Reimbursement of money spent to make temporary repairs to the vehicle in order to move it to a safe place.
- Towing charges incurred to tow the vehicle to a safe place or to the garage following an accident.
- The costs of alternative accommodation if the accident happens far from your home.
- Forced ATM Withdrawal
- Loss of Keys
- Theft of Lights and Indicators
- Theft of Side Mirrors
- Theft of Wheel Rims and Wheel caps
- Theft of Toolbox
- Theft of the spare wheel
- Theft of the spare wheel cover
Claims Procedures Following an Accident
In the event of a road accident, there are a number of things you must do to ensure you don’t compromise your chances of getting compensated.
- Chief among these is never to admit liability. While an accident scene can be a high-pressure situation, you must never admit liability or put down anything in writing that could jeopardize the position of your insurance company when defending you. In fact, all motor insurance policy documents explicitly state that you must never admit liability.
- Take photographs of your vehicle and other vehicles, persons and property involved in the accident.
- Take the contact details of any witnesses.
- Notify the police immediately and obtain a police abstract.
- Notify your insurance agent and insurance company immediately and follow any instructions you are given.
- Keep detailed records of receipts, hospital records and any other pertinent documentation.
If you would like to find out more about Motor Insurance or for a no-obligation quote, do not hesitate to request a quote and one of our insurance gurus will get back to you.