How Big Brother can affect your car insurance

This week the Ombudsman for Short-Term Insurance, Dennis Jooste, warned consumers about the implications of taking out a driver behaviour monitoring policy.

Those who take out such policies have a device installed in their car, which monitors how they drive - so sharp acceleration and braking, excessive speed, careering over speed bumps all those things are recorded by the unseen gizmo.

Motor vehicle insurers encourage drivers to have the device installed to encourage responsible driving, and the carrot is a discounted premium. 

Sounds great, but Jooste warns that some insurers use that information to reject claims. 

“Some” being the operative word, it must be said. Some do, some don’t - so it’s up to the policy holder to read the small print and make sure they know how that information will and won’t be used.

The conditions stated by the insurer  

What prompted the Ombudsman to issue the warning was a specific case which his office handled recently.

The insurance policy in question - the company is not named - required the consumer to have an approved driver monitoring tracking device installed in his car. 

Here’s the thing - the wording of the policy stipulated that bad driver behaviour would result in the cancellation of the policy. It also stipulated that information obtained from the tracking device would be used at claim stage which could determine the outcome of the claim. 

At the time of taking out the cover, the consumer was told by the sales consultant from the insurer of the policy terms and conditions and that there would not be cover for any loss resulting from reckless driving.  

The policy wording also said that if the consumer was found to have exceeded the speed limit by more than 30km/hour in the 60 seconds leading up to an accident, any claim in respect thereof would not be paid.  

He accepted the terms and conditions of the policy and had a driver monitoring tracking device installed in his vehicle.

You guessed it - he was involved in a car accident some time later and submitted his claim to the insurance company, claiming to have been driving at less than 60km/hr at the time of the accident.

But unfortunately for him, the monitoring device told a different story. The insurer requested a detailed report from the tracking company, which revealed that in fact he’d been travelling at between 130 and 140 km/hour in a 70km/hr zone, and that his speed immediately before the crash was 109km/hr and at the actual time of the impact 70km/hr - that’s some very harsh last-minute braking.

The Consumer's loss 

So the insurer concluded he’d been speeding at the time of the accident and rejected his claim as a result.

The consumer then lodged a complaint with the Ombud’s office, which found that the insurer had followed all the policyholder protection rules, everything had been properly disclosed, and that the driver had been speeding at the time of the crash, so the insurer was justified in rejecting the claim.

So he got a lower premium because of that driver monitoring device, but in the end it cost him dearly.

The Ombud didn’t go into the cost of the repair, but it was no doubt hefty. So hefty that the car was written off, even. 

So the advice is, if you’ve agreed to have one of these driver monitoring gizmos installed in your car, know what the information it gathers on the way you're driving is and isn’t going to be used for, so there are no horrible shocks should you need to make a claim.

As I said, the company in that case wasn’t named by the Ombud, but I know that Discovery Insure encourages its policy holders to go driver monitoring, so I asked if this info was ever used in deciding whether or not to approve claims.

CEO Anton Ossip told Consumerwatch that more than 130 000 cars  were actively using our telematics technology, but that the company does not use captured to reject claims.

“This is explicitly stated in our contract wording,” he said.

So, you may well ask, what’s the point of the driver monitoring, then?

Discovery says it uses the technology to incentivise better driving behaviour and positively at claims stage to verify the time and location of the accident.

Also the information can be used, with the client’s permission, to prove that third party was at fault in an accident.

Texting while driving 

One of the things which this technology also measures is distracted driving due to cellphone usage at the wheel

Coincidentally, also this week, advanced driver training company MasterDrive released startling stats about cell phone usage in cars - did you know that about a quarter of accidents in South Africa happen while the driver is on a cellphone?

A single use of a cellphone results in an average of 52 seconds of distracted driving, hence Masterdrive’s new campaign they’re calling ‘It can wait.’

They’ve compiled two excellent infographics about driving and cellphone use. 

For example, your field of vision narrows dramatically when you use a cellphone while driving, whether you're using a hands-free kit or not - you can miss seeing up to 50% of what’s around you.

That’s because the activity in the area of the brain which processes moving images decreases by up to a third when listening or talking on a phone.

Check out the info graphics - they are very sobering, and explain a lot of the erratic driving we’re seeing on our roads.