An Operational Circular titled “Settlement of claims on damaged or stolen vehicle tyres and shock absorbers/springs”, issued on 24 January 2017, provides a good example of Treating Customers Fairly in action.
Commercial and Personal lines Motor policies cover loss of or damage to the insured vehicle. Without loss or damage the Company is not liable. Damage to tyres by application of brakes or by road punctures, cuts or bursts are excluded, but impact with objects like potholes and pavements are seen as accident damage and are covered by the policy.
Where a tyre is damaged (or stolen) we will pay for a replacement subject to the basic first amount payable. This is a simple solution for tyres that are not used for propulsion (known as trailer wheels). For example, where the vehicle is front wheel drive and a rear tyre is damaged or where the vehicle is rear wheel drive and a front wheel is damaged. These tyres rotate individually with no shared moving parts.
However, when it comes to driving wheels (the ones that are used to propel the vehicle) and especially all-wheel drive vehicles, replacing only the damaged tyre will very likely result in damage to the drivetrain (the group of components that deliver power to the driving wheels).
The problem is that the drivetrain turns all the drive wheels at exactly the same revolutions, but tyres with more wear will inevitably have to turn faster to make up for the smaller diameter. This uneven speed of revolving will result in damage to the drivetrain. This is why most vehicle manufacturers have guidelines for the replacement of tyres, especially for all-wheel drive vehicles.
- Are we liable in terms of the policy to replace undamaged tyres? No, without loss or damage the insurer is not liable.
- Do we succeed in putting the insured in the same position they were in before the loss if we replace only the damaged or stolen tyre and the insured has the additional expense of replacing the other tyres that the manufacturer insists should also be replaced? Is that fair?
- What if we have to replace a damaged shock absorber or coil (or leaf) spring while the opposing one is not 100%, but still in working order.
- What if the vehicle’s handling and safety will be compromised by replacing only the damaged part? Can we send our policy holders on their way knowing that their vehicles are not safe?
Commercial and Personal Lines underwriting decided that, for our cover to be practical, in the spirit of equity and fairness and doing insurance good and proper, we will make a concession for the replacement of undamaged (or not stolen) tyres, shock absorbers and springs as follows:
- ONLY if required by the manufacturer or where it will influence the warrantee of the vehicle (confirmed in writing by the manufacturer).
- Santam retains the salvage.
- Fair wear and tear will be deducted for the tread already used on all tyres or the wear and tear on shocks or springs.
- An excess is payable on the total amount of the claim.
If one compares this to some of the case studies regularly published by the ST Ombud, it is clear that this decision by Santam is indeed proactive, and needs to be commended.