Top tips for brokers: How to work out adequate sums insured for motor vehicle
As a service to our brokers, we thought it would help to share with you some ideas relating to the setting of sums insured on motor cars/bakkies:
- Claims settlements are based on the retail value of the vehicle calculated using the auto dealers digest. So, the first step in setting the sum insured should be to establish this value.
- To this figure one must add an amount for accessories which do not come standard with the vehicle. Examples of these are: canopies, towbars, after market mag wheels, and do not forget the Tracking Unit.
- If the insured purchase a new vehicle and suffers a total loss within the first 12 months, the settlement can be the purchase price at the time of the loss of a new vehicle of the same model provided the sum insured is adequate. This means that an estimate needs to be made of what the purchase price of an equivalent new vehicle will be in 12 months time, and this figure should be used instead of the Retail Value in terms of point 1 above.
- Our policy also automatically includes Credit Shortfall cover, provided the sum insured on the vehicle is adequate to cover the value of the vehicle plus the amount owing by the insured under her/his instalment sale or lease agreement. So, if an insured is still paying her/his car off, the amount owing should be established from the bank and if this figure is higher than the figure calculated above, the amount owing should be used for the sum insured.
We trust that the above will prove of assistance, but if you would like to discuss any aspect, please contact Brolink:
Phone: +27 (0) 12 673 0000