Comprehensive insurance is a mandatory requirement for one to qualify for motor vehicle purchase financing as well as logbook loans in Kenya.
It will therefore concern any prospective motor vehicle owner to learn of the latest development insurance where a category of small popular vehicles is being denied comprehensive cover over what has been termed as “misuse”.
GA Insurance Limited, in a notice to business partners dated October 21, 2022, stated that it would no longer be allowing comprehensive insurance covers for over six motor vehicle models in Kenya over ‘unacceptable losses’ from policies associated with these vehicles.
The insurer will no longer be covering comprehensively among others the extremely popular Toyota Probox, its sister Toyota Succeed, Toyota Sienta, Toyota Porte and all Suzuki models with a value below Ksh1 million.
“After a comprehensive review of our motor private book and the loss trends, we wish to communicate that there are vehicles whose usage has been misemployed and therefore have proven to be a challenge when settling claims.
“We will therefore not underwrite the below models on comprehensive basis to ensure smooth running of business and maintain an excellent client experience.”
These boxy, spacious, extremely reliable work horses dot the entire country. A probox embodies the Kenyan hustler - if you haven’t been carried by one, or have had things delivered by one, you could be easily described as one who has not hustled enough.
The Sienta on the other hand has become the go-to shuttle for peri-urban routes. Sitting just about 7 or so passengers, the vehicle has been the subject of tens of protests by matatu operators threatened to be driven out of business.
It has the impression of comfort as compared to a majority poorly maintained 14-seater matatus, will definitely fill up faster and for a moment passengers do not feel exactly as if they are travelling by public means if they chose this option as compared to the conventional matatu.
It is no wonder the demand for these two models is over the roof as well as the resale prices - since someone is either looking for a Probox, disposing of a Probox to upgrade to a Sienta or increasing their fleet.
There are generally two kinds of motor vehicle covers; Third Party and Comprehensive. The Third Party Only (TPO) cover is the minimum cover required for all vehicles on Kenyan roads according to Chapter 405 of theKenya Traffic Act.
Under TPO, the motor vehicle owner is insured against charges, expenses and costs from third parties in the event of a road accident or any other event that may cause loss to members of the public. These may include physical bodily injuries, death or permanent disability and damage to third party property. It does not offer coverage against damages to the insured vehicle.
TPO covers are priced differently based on the use the vehicle is put to ranging from private vehicle, commercial vehicle, special purpose vehicle e.g. trailer, excavator, motorcycles, PSVs such as vehicles for taxi-hailing business and matatus which is considered separately as a special PSV category.
Comprehensive insurance, as the name suggests, in addition to covering against third party claims also covers the asset itself from damages as well as accessories outside and inside the vehicle.
In Kenya, only two insurance companies offer coverage for Matatus; Directline and Invesco Insurance. Matatus have perhaps the most negative public opinion in Kenya -they are associated with lawlessness, reckless driving, damage to public and private property, bodily harm and deaths. According to the Association of Insurers in Kenya (AKI), insurers pay hundreds of millions annually to claims associated with the matatu industry.
As such, this brings into perspective why the misuse of the vehicles above, typically registered as private vehicles is of major concern to insurers in Kenya.
As reported by the Business Daily, GA Insurance stopped comprehensive covers for the models mainly due to their misuse, breaching the policy requirements.
Since the cost of insuring a motor vehicle increases as it moves up the risk levels in terms of the use it is put to - from private to commercial to matatu - many Kenyans are tempted to redeploy their vehicles to more risky use such as passenger and goods ferrying while enjoying comprehensive coverage.
It is important to note that even if your insurer agrees to cover your vehicle - including those listed above - comprehensively, your cover will be voided if you change the vehicles’ use, say from private to commercial or PSV.
Kenyans have been taking advantage of loopholes in surveillance by insurers or colluding with investigators as fraud remains one of the highest challenges insurers are dealing with today.