How Santam (and other Insurance Companies) Take Your Ride

My wife was involved in an accident on 27 February when someone jumped a stop street and tried to turn in front of her. She was unable to stop in time and the front of her car collided with the side of the offending car. The offending party was not insured, so we had to claim from our insurance. The sequence of events that ensued clearly showed the kind of "racket" that is being run by insurance companies when it comes to older vehicles, in this case a 2006 Daihatsu Sirion with about 87000km on the clock and a full service history. The recipe is as follows:

Step 1: Prevent the client from insuring the vehicle for its actual market value. Step 2: Wait for an appropriate insured event. Step 3: Appoint an assessor to inflate the cost of repairs as much as possible. Step 4: Use the above to justify s****ping the vehicle and paying the client the insured value less excess. Step 5: Auction/sell the damaged vehicle to recover a good portion of the insured value Step 6: Leave the unwitting client exposed to foot a good portion the vehicle replacement cost.

Step 1: Prevent the client from insuring the vehicle for its actual market value: The vehicle was insured for R30000 at the time of the accident. The brokers had automatically decreased the insured value from the original purchase price every year. When I requested the broker to increase the insured value because I felt that the car had a low mileage and was probably worth more, she said that Santam would not insure the car for more as this was their recommended "book" value.

Step 2: Wait for an appropriate insured event: The car was damaged in an accident, but repairable.

Step 3: Appoint an assessor to inflate the cost of repairs as much as possible: Upon lodging a claim through my brokers, Santam sent over their assessor to inspect the vehicle. The assessor arranged a panel beater to do a quote for repairs. The panel beater inspected the car and cracked the windscreen whilst forcing open the bonnet. The panel beater sent the quote to the assessor amounting to R78686. The quote included the repair costs for the windscreen that they had broken. I notified the brokers of this, as it was ********** to do this.

Step 4: Use the above to justify s****ping the vehicle and paying the client the insured value less excess: The assessor used the quoted repair costs of R78686 to offer us two options. Either: (1) Let Santam "s****"/take the vehicle and pay us the insured value less excess amounting to R26500, or (2) Keep the vehicle and have it repaired at our discretion and Santam will pay us the insured value less R10000 less the excess, giving an amount of R16500.

To put these amounts in perspective, equivalent vehicles on Gumtree at the time were in the region of R60000. We obtained quotes from other panel beaters in the area, which incidentally were both better rated on Google reviews, that came in at R56044 and R58138 respectively. These quotes excluded the windscreen, which we considered to be a separate insured event to be addressed between Santam and the assessor's panel beater who cracked it. The quote by the assessor's panel beater amounted to R68286 without the windscreen, still substantially more than the other quotes.

Since it was evident that it might cost less to have the vehicle repaired than to buy a replacement, we made a detailed representation to our brokers who sent it on to Santam. The representation included the additional quotes we had received, the prices of potential replacement vehicles on Gumtree and the fact that we were advised that we could not insure the vehicle for more than R30000. We requested if they would consider letting us have the vehicle repaired at the panel beater with the lowest quote because it was less than the cost of a replacement vehicle. We also requested if Santam could pay the insured value less excess to the panel beater (R26500) and we would contribute the balance. Despite our detailed representation, the response from Santam was a blatant, unprofessional and confusing 2-liner: "After perusing the clients e-mail and values, we will withhold our decision as per my previous e-mail. Santam cannot settle the full insured amount and have the client retain the vehicle." No concern that we were heavily exposed due to poor insurance, no mention of the questionable ethics of inflating quotes with unrelated damage.

At the end of the day, about a month after the accident, a replacement vehicle popped up on Gumtree for R50000, which was now less than the repair costs. I had to move quickly to inspect it secure it on the same day, as there was another interested buyer. Santam collected the damaged vehicle and paid out R26500.

Step 5: Auction/sell the damaged vehicle to recover a portion of the insured value: Assuming that Santam expected to get R10000 for the damaged vehicle based on their "offer" of paying out R10000 less if we chose to keep the vehicle and have it repaired, Santam was only exposed to R16500, or 55% of the insured value. (Apart from damage to the front bumper, fenders and bonnet, the vehicle had not suffered structural damage and was still driveable.)

Step 6: Leave the unwitting client exposed to foot a good portion the vehicle replacement cost: To replace the vehicle with an equivalent one (2005 model, 90000km on the clock) eventually cost us R23500 after the insurance pay-out, or 47% of the replacement value.

Incidentally, the person who sold us the replacement vehicle and has been in the 2nd hand car industry for many years, said the 2nd hand dealers "book" used to establish 2nd hand car prices and insurance replacement values is compiled by "people in offices using formulas" and is completely out of touch with the reality of the market. He said most dealers are of the opinion that the values in the "book" are to be taken with a pinch of salt.

I will be off looking for a new insurer that is willing to insure my vehicle for a realistic replacement value. Santam is clearly not interested as this will upset their lucrative "racket".

To other people with good-condition-low-mileage cars, you might find it cheaper to self-insure. The insurance pay-out will not even come close to restoring or replacing your vehicle!