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With most businesses thriving on mobility, the numerous dangers that your commercial vehicle is exposed to on South Africa’s roads are quite significant. As a business owner of commercial vehicles, it is important for you to understand your business vehicle insurance needs.
Commercial vehicle insurance differs in comparison for most insurance companies and therefore standardised packages (along with optional extras) are offered by insurers. It is always best to choose a tailored insurance cover for your business, for example, commercial vehicles that operate within shorter routes do not require the same cover as those that travel long distance.
We’ve put together a few handy tips to help you pick out the perfect insurance solution for your operation… and possibly avoid unnecessary excess payments, stock deterioration and loss of revenue.
Choose a flat excess rate: Many insurance companies put in place something known as percentage excess, whereby the first amount payable by a client is often astronomical, given the high value of the vehicle. In order to make budgeting easier and to avoid any cash flow crises, rather opt for a flat excess, which makes budgeting in a time of loss far more manageable.
Plan ahead: You never know when an employee might find themselves incapacitated or unable to work. Rather than losing out on potential business or risking sending an uninsured driver onto the roads, opt instead for an insurance option where the individual drivers do not need to be named or specified on the policy, thus reducing the risk of complications down the line.
Choose deposit cover: Even though your insurance company might pay you out in full in the event of a vehicle being stolen or written-off, the potential loss of revenue while you wait can be devastating to your business. As a result, it’s wise to opt for deposit cover, which allows you to claim a cash amount of up to 10% of a vehicle’s value, thus enabling you to get back on the road far quicker. If you’re smart in your insurance choices, you will get the benefit of “Like-for-like car hire” cover which allows you to rent a similar vehicle and keep your business operational while your claim is assessed and processed and your vehicle repaired. As an alternative, vehicle-loss-of-use cover pays a daily allowance towards the rental of a similar commercial vehicle while your vehicle is being repaired.
Plan your routes: If your business endeavours take the insured vehicle out of the country from time to time, it’s important to make sure that your insurance policy covers you in full for any incidents that might take place outside the country’s borders. It’s also critical that you specify the times of day you’re planning to be on the roads, as premiums and cover levels differ between day and night driving.
Pay as you go: If your business operation extends no further than the boundaries of your immediate metropolitan area, you shouldn’t be paying the same premium as a fleet owner transporting goods between Johannesburg and Cape Town on a daily basis. As such, make sure to specify the nature of your commercial vehicle business, as well as the parameters of its operation, so as to ensure that you receive a fair premium price.
Protect your stock: Transporting perishable goods presents an additional risk for commercial vehicle owners, as a breakdown or unforeseen incident can compromise large quantities of stock. As such, it’s always wise to invest in Deterioration of Stock cover to avoid unnecessary losses. In some instances, it also benefits you to link the cover of your goods in transit to a specific vehicle, as this can substantially lower the premiums you pay.
Manage your exposure: Those little optional add-ons offered by your insurer might seem unnecessary at the time, but they can have an enormous impact down the line. Lock and key cover and comprehensive roadside assistance etc. can help you to manage your risk more effectively by creating less inconvenience in difficult situations.
Other Insurance Considerations: As you shop for a small business insurance policy, you should also consider getting a business insurance cover for your belongings, such as goods in transit insurance or all-risk items insurance if business activities are run from your home.
You may also want to consider Public Liability cover – No matter how careful you are, you may find yourself in a variety of situations that could result in a third-party claim against your business, so it’s a good idea to be prepared — just in case!