Cross Border Motor Insurance Considerations - FIA Release

An issue that recently caused some interesting debate in the Non-Life Technical sub-committee, was that of the variations in treatment regarding the issue of insurance cover for the repatriation of motor vehicles outside of the borders of South Africa and related expenses.

On examining the relevant policy wording of several insurers in this regard it seems that there is indeed quite a wide disparity in the treatment. In broad terms the variations are as follows:

• Basic vehicle cover – insurers all include the usual cover in foreign countries as defined in the “standard” territorial limits.
• In most cases, insurers specify cover for the vehicle during transportation (generally by sea and sometimes air only) between such countries.
• Whilst some policies are completely silent on the issue of the repatriation of damaged vehicles, quite a few insurers refer to this, sometimes imposing a maximum sum insured for the costs involved. However, there are considerable differences in the cover, with most requiring that the insured pick up the cost of transport to the border initially, and some imposing a limit on the cover (in some cases more so for certain specified countries). Some insurers specifically spell out that there is no cover for repatriation costs, which perhaps leaves the question open as to how settlement may be made if the insured decides not to repatriate. 
• In some cases, this cover is “standard” as part of the policy, whereas in others it is a specific extension (perhaps even, for example, applicable to 4x4 cover only). 
• There are also differences in the approach that insurers take with regard to whether repairs will be covered if done in the foreign territory or whether they need to be effected in SA only.
• Some insurers also refer to the issue of possible duties, etc. involved where a car is damaged to the extent that it is not worth repatriating (or stolen in a foreign area), where the owner could then become liable for import duties, although in some cases a limit is imposed on this cover. The issue of the treatment of scrap value of such vehicles that may arise is seldom addressed.
• The issue of general (third party) liabilities which may be incurred in a foreign jurisdiction is largely not covered, with some exceptions, where it seems that stated limits will be applied in most, but not all, cases.
• One or two insurers provide additional assistance in terms of overnight accommodation for the occupant(s) of the vehicle in the foreign country, temporary car hire or even the cost of a flight home. 

Brokers should be aware of these differences, especially with clients who are potentially likely to travel outside of South Africa extensively.

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