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Could You Get Premium Relief for Your Car Insurance During COVID-19?

South African Insurance Companies Offer Car Insurance Owners Relief During COVID-19 Lockdown

Premium relief is designed to help South Africans who are unable to pay their car insurance due to COVID-19.

Banks and insurance providers in South Africa have recognised that many of their clients will have challenges with paying their monthly premiums during and directly after lockdown. Due to the sudden disruption of our economic activities in March 2020, many people who usually pay their insurance premiums on time may be unable to do so. If you find yourself in this position, there could be a solution.

Insurance providers aren’t ignorant of our plight as regular South Africans. The pandemic and consequent lockdown have brought sudden and abnormal circumstances to bear. Banks and insurance companies have therefore decided to offer various forms of premium relief after the FCSA announced exemptions that make room for such arrangements.

What is Premium Relief?

Premium relief allows insured individuals and companies temporary reprieve from the obligation to pay a premium fully or partially for their existing policies due to unprecedented and exceptional circumstances. When premium relief is in effect, the FCSA requires that it shouldn’t affect, reduce, or limit the insured entity’s ability to claim or benefit from their existing policy. This is an important detail because South Africa’s Short-Term Insurance Law and Regulations by FCSA prohibits insurance providers from paying out claims when premiums aren’t up to date, allowing for a grace period (usually around 15 days).

Under normal circumstances, these prohibitions would make it impossible to offer premium relief. Notices and communication published recently have approved temporarily exempting insurers from these limits. Thanks to these changes, you can now apply for premium relief with your insurance provider if they are offering it.

How Does Premium Relief Work?

Some insurance providers are offering extended grace periods or premium holidays without cover. Premium relief is different in that your cover should remain unaffected. By restructuring payments and funding relief options, insurers make room for you to pay your insurance in adjusted ways.

The simplest form of premium relief is a premium discount for a predetermined period. For the date decided by the insurance provider, you will be able to pay less for your insurance by the percentage they have determined (for example 15%). Some insurance providers are offering reduced excesses, meaning if an insured event occurs, the amount you need to pay in will be lowered. Extended grace periods have also been put in place by some insurance companies since the above notice, allowing their clients to pay premiums much later without losing their cover or policies.

Some insurance companies are applying non-payment periods where insured entities do not need to pay the premium but are still covered. Finally, there are insurance companies applying logic to reassess clients’ risk profiles an offer them lower premiums. For example, a car not in use during lockdown is exposed to fewer risks, and the cost for insuring it can then be lowered too.

Your insurance provider may offer one or more of the above options or may even offer customised solutions tailored to your specific needs. In order to qualify for premium relief, you will need to be:

  • An existing policyholder with the relevant insurance provider.
  • In good standing with the insurer, meaning your premiums payments up to date (sometimes within a month grace period). 
  • Unable to pay your premiums.

Who is Offering Premium Relief for Car Insurance During Lockdown?

Most insurance companies and banks have put plans in place to offer relief options for small business owners and individuals in financial distress. OUTsurance is paying policyholders 15% of their premium back in May 2020, among other relief efforts. No extra steps are necessary. If you qualify according to the above points, you will automatically receive this premium reprieve.

SANTAM refunded 20% or car insurance premiums in April to their policyholders. MiWay is offering COVID-19 relief along with a further 7% discount on premiums over and above the 10% discount already put in place earlier in the year. Auto and General offers cashback options, the option to pause your policy, the option to use your cashback, free car hire, and premium flexibility. Banks like ABSA and Standard Bank are also offering relief options.

How to Apply for Premium Relief for Car Insurance in South Africa

To find out more about the benefits and other relief options available from your insurance provider, you can contact them directly. In some cases, you will not need to take any steps to benefit, and in other situations, you may need to.

Credit experts suggest that policyholders should contact their insurance providers as soon as possible to make arrangements. Once payments bounce, accessing premium reprieve may get more complicated. Policy benefits and credit scores could also be affected. The best way to avoid these complications is by contacting your insurance provider without delay.

This means it is best not to wait until the date your debit order should have gone off. This will help give you and the insurance provider as much time as possible to make arrangements that will help minimise the impact of the pandemic on you and them.

DISCLAIMER: The information provided in this article is meant for informational purposes only and should not be construed as legal, medical, or financial advice. Facts stated in this article are correct at the time it was published.

Sources: OUTsurance; Santam; Moonstone; FAnews; Masthead;