Scratch and dent cover and your comprehensive excess: how they fit together

A comprehensive car policy pays for larger losses and asks you to carry an excess. A scratch and dent plan is meant for small cosmetic repairs, on its own terms. They are separate contracts. Your policy schedule shows your excess; the plan terms show what that plan pays. Olvian refers requests and does not advise.

What is an excess, and where do you find yours?

An excess is the part of a loss that you pay yourself when you make a claim on an insurance policy. It is stated in your policy schedule, as a fixed amount or in some other way the policy sets out.

The Policyholder Protection Rules (Short-term Insurance) deal with excesses in Rule 6.1. It says that the way and the extent to which the risk of loss is borne by policyholders through excesses "must reasonably balance the interests of the insurer and the reasonable benefit expectations of a policyholder". It is a standard for the insurer, not a number. The figure that applies to you is in your policy documents.

Rule 17.8.3(d) also says an insurer must disclose to a claimant any excesses payable. So when you tell your insurer about damage, ask what the excess on that claim will be, in writing, before you go further.

How does a scratch and dent plan relate to a comprehensive policy?

They are different products with different jobs.

• A comprehensive policy is an insurance contract with your insurer. It responds to the events it lists, such as collision, theft or fire, and applies an excess.
• A scratch and dent plan is a separate arrangement with a provider, aimed at small cosmetic damage, with its own limits on size and number of claims.

One does not replace the other. The plan does not change your comprehensive policy, and the policy does not change the plan. Each has its own terms, its own claims process and its own complaint route. That is why the plan terms matter: they say what is, and is not, a matter for the plan.

Why do people ask about the excess?

Because a small repair can cost less than the excess, or close to it. When that is so, a claim on a comprehensive policy may not leave you better off, since you carry the first part of the loss yourself.

Olvian does not tell you whether that is true for your car, your policy or your finances. That depends on your excess, the repair and the plan, and it is a judgement for you to make with the licensed provider and your own insurer. The facts you can check are these: your excess amount, in your schedule; what the plan pays for, in the plan terms; and whether the plan has any charge when you claim, which you should ask the provider.

Will a small claim affect your insurance?

The answer lies in your insurer's terms and rating, and Olvian cannot give it. Ask your insurer these questions:

1. If I claim for minor damage, how is it recorded on my policy?
2. Does a claim change my premium at renewal, or any no-claim benefit?
3. Do I have to report damage even if I decide to pay for the repair myself?

Get the answers in writing if you can. A scratch and dent provider cannot answer for your insurer.

What happens to a claim you do make on your car policy?

If you do claim on your comprehensive policy, the insurer has duties under Rule 17.6 of the Rules. It must accept, repudiate or dispute a claim within a reasonable period after receiving it (17.6.1) and must notify you in writing of its decision within 10 days of taking it (17.6.2). If it repudiates or disputes the claim, the notice must give its reasons in plain language, in enough detail for you to dispute them, and must tell you that you may make representations within a period of not less than 90 days (17.6.3). If you do make representations, the insurer must give you its decision in writing within 45 days of receiving them (17.6.5).

Those rules apply to an insurer. They apply to a scratch and dent plan only if the plan is itself an insurance policy. Ask the provider whether it is.

What should you ask a scratch and dent provider about the excess?

Ask whether the plan has any amount you pay when you claim, and whether it has a waiting period before you can claim. Ask also whether using the plan affects anything on your car insurance. The provider can answer the first two. Only your insurer can answer the third.

Put the answers next to your policy schedule. If anything is unclear, ask for it in writing. A plan with clear terms is easy to explain. If a provider cannot explain a term, that is worth noting before you agree.

What should you keep on file?

Keep your policy schedule and wording, the plan terms, and any email in which a provider or insurer answers one of your questions. If damage happens, they let you check quickly who covers what, and they give you something concrete to point to if there is a dispute.

Write down the date the damage happened and how you found it, and take photographs before any repair. That record helps whichever route you choose, whether a claim, a plan repair or a repair you pay for yourself.

Who is responsible for what?

Keep the two relationships apart in your mind. Your insurer is responsible for your comprehensive policy: its cover, its excess, and how it decides a claim. The scratch and dent provider is responsible for the plan: its repairs, its limits and its claims process. Neither answers for the other, and neither can change the other's terms.

That matters when something goes wrong. A complaint about a refused comprehensive claim goes to your insurer first, and then to the relevant ombud. A complaint about a plan goes to the plan provider. If you are unsure which of the two a problem belongs to, ask both, in writing, and keep the replies.

Do exclusions and limits have to be pointed out to you?

Yes, where they limit the provider's liability. Section 49(1) of the Consumer Protection Act says a notice or a provision of a consumer agreement that purports to limit the risk or liability of the supplier, to make you assume a risk or liability, to make you indemnify the supplier, or to be an acknowledgement of a fact by you, must be drawn to your attention in the manner the section requires. Under section 49(3) it must be written in plain language. Under section 49(4) it must be drawn to your attention conspicuously, in a form likely to attract the attention of an ordinarily alert consumer, and before you enter into the agreement or are asked to pay. Under section 49(5) you must be given an adequate opportunity to receive and comprehend it.

Section 51(1)(b)(i) adds that a supplier must not make an agreement subject to a term that purports to waive or deprive you of a right under the Act.

In plain terms: an exclusion or limit that matters should not be buried. If the provider reads the limits to you on the call, ask for the same words in writing. If you cannot find an exclusion the provider relies on later in the documents you were given, say so when you complain.

Who answers the judgement questions?

Whether to claim on your policy, pay for a repair yourself or use a plan, and what level of cover makes sense, is not for Olvian to answer. Olvian is a lead-referral service: you ask once, and your request goes to licensed providers who pay Olvian a fee and call you back. It is not an insurer, broker, FSP or adviser.

The licensed provider who calls you is the right person to answer questions about their plan. Your insurer or broker is the right person to answer questions about your car policy.

Sources

• Policyholder Protection Rules (Short-term Insurance), Government Notice 1433, Government Gazette 41329, 15 December 2017: https://lawlibrary.org.za/akn/za/act/gn/2017/1433/eng@2017-12-15
• Tranche 2 amendments to the Short-term Insurance Policyholder Protection Rules, September 2018 (National Treasury): https://www.treasury.gov.za/twinpeaks/Policyholder%20Protection%20Rules%20and%20Supporting%20Document/Tranche%202%20amendments%20to%20the%20Short-term%20Insurance%20PPRs%20Sept%202018%20(track).pdf
• Consumer Protection Act 68 of 2008, Government Gazette 32186: https://www.gov.za/sites/default/files/32186_467.pdf
• National Financial Ombud Scheme: https://www.nfosa.co.za
• Motor Industry Ombudsman of South Africa: https://www.miosa.co.za
• National Consumer Commission: https://www.thencc.org.za
• Financial Sector Conduct Authority, Financial Consumer page: https://www.fsca.co.za/Financial-Consumer/