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Thread: BE CAREFUL - THIS CAN COST YOU

  1. #1
    Gold Member Phil Cooper's Avatar
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    BE CAREFUL - THIS CAN COST YOU

    Many businesses, especially smaller ones with sketchy admin, run frightening risks daily owing to unsuspected gaps in their insurance portfolios. Motor vehicles, for instance, are such a familiar part of our lives and businesses, we scarcely spare a thought for the large, powerful, dynamic machines that they are, even “old”, “small”, “slow” ones! They cause horrifying injury and damage with unexpected legal consequences.

    Example:

    An Admin Assistant / Secretary would not ordinarily have to do anything for the firm outside of the office. But what if the banking is late and Jenny (let’s call her) is leaving early? It’s, “Oh, Jen, do us a favour and deposit this on your way home?” (Same applies to Post Office, L+W, Home Affairs, stationery supplier …!) Now, what is Jenny driving? Her own car, no doubt. But, is it insured? Oh, yes – great (!) But, wait, only for Private Use (eish!!)

    Jenny is effectively without cover from the moment she agrees to “just do you a favour”, and so is the firm. Her car may be a run-down mom’s taxi, but, if there’s an accident, the other party’s vehicle / property could be very valuable and they may blame her for the prang. And when her policy declines to pay, recourse against your company is a logical step to follow.

    What to do?

    For a modest premium (depending on how many employees you have) you can add an extension to your Motor section, namely CONTINGENT LIABILITY, to guard against exactly this. It covers the firm against any indirect (ie., “contingent”) liabilities it could pick up by being legally responsible for the actions of its servants going about its business in cars other than its (the firm’s) own.

    Hint 1:

    Avoid like the plague the temptation to have employees go outside their “course and scope” to run errands for you, esp.in vehicles. (Has other implications too – eg., Personal Accident; OHSA.)

    Hint 2:
    If they must go, rather have them use a company car, not theirs.

    Hint 3:
    Examine / Copy / Certify the Current Drivers’ Licences of All Staff and keep these on their staff files.

  2. Thank given for this post:

    AmithS (27-Jul-12), Martinco (30-Jul-12), wynn (27-Jul-12)

  3. #2
    Site Caretaker Dave A's Avatar
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    If Jenny is on a nominated driver policy, could the insurance turn the claim down because she happened to be running mail instead of her and her neighbour's kids?

    And what about sales staff on a vehicle allowance? Could the company be held responsible if the person happened to have "normal" personal vehicle insurance?

  4. #3
    Gold Member Phil Cooper's Avatar
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    Dave

    What counts is for what purpose the vehicle is being used.

    If it is "Private and domestic" and it is being used for business purposes there is NO cover, irrespective as to whom is driving.

    As to the second question - yes, the Company could be held responsible. They must take steps to ensure car is insured for Business use...

  5. #4
    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Phil Cooper View Post
    They must take steps to ensure car is insured for Business use...
    But we did - we're paying a vehicle allowance. What did you think that was for, to get a car for your personal use only?

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    Quote Originally Posted by Dave A View Post
    But we did - we're paying a vehicle allowance. What did you think that was for, to get a car for your personal use only?
    I guess we now have to check the employee's insurance to make sure they are covered for business use when giving them the allowance. It amazing how much responsability one takes on as an employer.

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    Site Caretaker Dave A's Avatar
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    I accept Phil's opinion as an insurance broker - the insurance company might reject the claim.

    I'd be happier with a legal precedent though when it comes to the employer being held responsible, especially in a vehicle allowance situation.

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    Diamond Member Blurock's Avatar
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    What exactly is the definition of business use? What is the difference between me driving to my sole prop business and collecting my mail and newspaper on the way and private use? (doing about 1000 - 1500 km per month)

    I see Business use as a risk where it involves high mileage and possibly transporting goods and/or customers/employees. Can an insurance company be so petty to refute a claim because I used my private car to visit a client?
    Excellence is not a skill; its an attitude...

  9. #8
    Gold Member Phil Cooper's Avatar
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    Regretfully, they can.

    ANY use in the course of your business - be it getting the mail, or going to the bank, would be regarded as Business use...

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    Disclose the type of use to your insurer. This avoids the obstacle. When I disclosed (on a recording that they kept) the use of my vehicle for occassional client visits and transport of small items (that could fit in boot) approx 3x per month, I got billed a whole R7 extra. Outscum wanted to nearly double my rate when declared for business. There is a median and you just need to have it on record. Some companies don't charge extra, as long as prperly declared and that it is very occassional. Speak to your insurer properly.

  11. #10
    Gold Member Phil Cooper's Avatar
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    Well said, kleva - that is the whole issue!

    Trying to cover up results like the below report - butI still think OutSurance are in the wrong.

    Categorically!


    OutSurance3.pdf
    Last edited by Dave A; 13-Aug-12 at 08:22 PM. Reason: removed duplicate attachment

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