What’s more, apps like CarTrip and Ugomyway can help you offset some of your running costs by allowing you to share rides with people travelling in the same direction as you. There are several benefits to carpooling, but it is important to understand the effect this can have on your car insurance.

Marius Steyn, Underwriting Manager at Santam says “It’s important to know the terms and conditions that may affect the cover on your policy. Not doing so runs the risk of cover shortfalls or your claim being denied altogether. 

So, before you hang up your car keys, decide which carpooling setup works best for you:

-Specific driver carpool: In this case, there will be a designated driver and car, and passengers pay a weekly/monthly rate towards costs like petrol, parking, and maintenance. It is recommended that this amount should not exceed the SARS Reimbursement Travel Allowance, i.e. no profit is made. Passengers should also know that they will be unable to claim from you for bodily injury in the event of an accident but can claim from the Road Accident Fund.

Alternating carpool: Here everyone takes turns to drive with their own cars on a daily, weekly, or monthly basis. Simply put: when you drive, you pay. When you ride, it’s free. In this case, no money is exchanged, and each driver is responsible for their own insurance and maintenance costs. As with the previous example, passengers will be unable to claim from you for bodily injury in the event of an accident and will have to claim from the Road Accident Fund.

Side hustle carpool: With apps like Carpool, you could use your car to earn some money on upcoming trips by accepting cash from strangers to share a ride with you. This should not be done with the aim of making a profit and it is recommended that the fares you collect should not exceed the SARS Reimbursement Travel Allowance. Passengers will be unable to claim from you for bodily injury in the event of an accident but can claim from the Road Accident Fund.

Employer carpool: Some employers offer staff the use of company vehicles to encourage carpooling. Employees would then pay a fare to cover petrol, insurance, and maintenance costs. 

Find the best fit for you:
Whichever carpooling scenario you choose, it’s important to let your insurer know if anything changes in your regular driving set-up as this can affect insurance claim excesses and pay outs.  For example, if the designated driver of your car is not the ‘regular driver’ quoted in your insurance policy documents and is effectively using your vehicle the most your claim may be negatively impacted due to additional excesses or premium being applicable. 

If money changes hands, things can get more complicated too. It could be seen by an insurer as a commercial transaction, especially if the money you’re receiving is more than what is necessary to cover petrol, maintenance, parking etc. You would then potentially need business insurance, or a special permit if you transport children or more than 12 people at a time.

Steyn concludes “Insurers have different definitions of what defines a ‘lift club’. In the case of Santam, when two or more people, who each own their own vehicle, all travel together in one vehicle and they take it in turns to each use their own vehicle and there is no other consideration of any sort, this can be termed a lift club.”
 
 
If you would like more information regarding carpooling and the impact it could have on your current insurance policy. Please contact the SBS office and speak to your policy administrator or broker.
 
Travel safe.
 
Regards,
 
Team SBS