Mind the insurance gap - how a couple's first-time car purchase turned into heartbreak

Buying a new, or new old vehicle is an exciting purchase for most of us.

But do be aware of an insurance trap that could result in you sitting with a big loss, instead of sitting back to enjoy that new-car smell.

Wendy Knowler makes the point that if you purchase a vehicle from a dealership and it's financed in full or in part, the banks instruct the dealership not to release the car until the buyer – or the dealership’s finance and insurance person, is able to produce a letter confirming cover.

"That letter assures the bank that should the vehicle be stolen or written off, their clients would not lack the means to keep servicing their debt to the bank."

Wendy Knowler, Consumer Journalist

But, as it turns out, that’s not total assurance, says the consumer journo.

That's because they release the car you've bought BEFORE the first, monthly premium has been paid to cover the days before it's made on the client’s chosen debit order day.

Knowler uses the heartbreaking case of a Vereeinging couple who'd just bought their first car, to be paid off over seven years, when they got caught in an insurance gap mess. 

The husband had an accident just two days after getting the car, and it was declared a write-off.

Their insurer, King Price, declined the claim on the grounds of non-payment.

It all boiled down to this first-time car owner apparently misunderstanding the fact that he'd had to pay a pro rata amount of about R550, ahead of when the full premium was successfully collected via debit order on the specified day of the month.

"I’ve gone back to ask the insurer - given how much is at stake, why it doesn’t proactively inform the client that the vehicle in question was not covered if the pro rata is not paid, and would remain so until payment was made."

Wendy Knowler, Consumer Journalist

To hear all the detail, listen to the interview audio at the top of the article