not insuring a vehicle properly Insurance According to Francois Smit, general manager of investigations at Miway Insurance Ltd., there may be significant risks for commercial use.
He says South Africa's e-hailing economy has expanded rapidly in recent years, with an estimated 150,000 drivers currently working across the country.
According to Smit, many of these drivers work part-time, using the platform after hours to supplement their income, while others rely on e-hailing as their primary source of income.. A worrying trend is emerging in South Africa's e-hailing sector, causing concern in the insurance industry, with some drivers opting for personal vehicle insurance rather than commercial cover in an effort to save on monthly premiums. Although this may seem to offer short-term savings, the potential risks can be significant.
“If a vehicle is being used for e-hailing and this has not been disclosed to the insurer, any claim arising from that vehicle, whether due to an accident, theft or third party injury, may be rejected on the basis of misrepresentation,” says Smit.
Ann Cloete from Insurance Brokerage and Risk Advisors Aon South Africa says wIt's tempting to earn extra money by delivering food or transporting passengers as an Uber Eats driver, but it's important to be aware of the risks involved.
“Many vehicle owners may not realize that using their personal vehicles for business purposes without proper insurance coverage can expose them to significant liabilities and losses,” says Cloete.
According to Smit, in the insurance context, material misrepresentation occurs when a policyholder provides false, incomplete or misleading information to an insurer, whether at policy initiation, renewal or claims stage.
“This means that even if a driver has initially insured his vehicle for personal use, but later starts using it for e-hailing without informing his insurer, “They are still at risk of having their claim denied,” says Smit.
smit notes Once a vehicle is used to carry fare-paying passengers, its risk profile changes significantly. “From an insurance perspective, the vehicle is no longer being used for private or general business purposes, but for fare-paying passenger transport, which carries a significantly higher risk,” he says.
Smit says another common misconception is that standard business-use vehicle insurance automatically covers e-hailing activities. Smit says this is not necessarily the case.
“The moment a driver accepts a ride through an e-hailing platform, the vehicle is effectively being operated commercially, and a standard business policy does not automatically extend to cover it,” he says.
According to Cloete, the goal is to ensure that the costs of using your vehicle to carry paying passengers or cargo do not outweigh the benefits.
“It's important to speak to a broker who can provide insurance solutions with different additions depending on the driver's needs. Remember, coverage is linked to your risk profile, which requires you to be a responsible driver who follows road rules and avoids distractions like texting while driving,” she says.
In addition to the risks to the drivers themselves, Smit says insurance brokers also have a responsibility to ensure customers are given appropriate advice on when vehicles may be used commercially. “From a broker's point of view, knowing that the customer intends to use the vehicle commercially, proceeding with a personal lines cover, even at a later stage, exposes both the customer and the broker to unnecessary risk,” he says.
“Insurance works on the principle of full disclosure. Drivers should ensure that their insurer knows exactly how their vehicle is being used so that the right cover is in place. Although commercial cover may cost a little more upfront, it ensures drivers are protected if something goes wrong,” says Smit.
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