Explore the growing e-hailing economy in South Africa and the critical insurance risks drivers face when opting for personal vehicle insurance instead of commercial cover.
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Failing to insure a vehicle is correctly insured for commercial use can lead to significant risks, according to Francois Smit, general manager of investigations at Miway Insurance Limited.
He says South Africa’s e-hailing economy has expanded rapidly in recent years, with an estimated 150 000 drivers currently operating across the country.
According to Smit, many of these drivers work part-time, using platforms after hours to supplement their income, while others rely on e-hailing as their primary source of income. An alarming trend is emerging within South Africa’s e-hailing sector, raising concerns in the insurance industry, with some drivers opting for personal vehicle insurance instead of commercial cover in an attempt to save on monthly premiums. While this may appear to offer short-term savings, the potential risks can be significant.
“If a vehicle is being used for e-hailing and this has not been disclosed to the insurer, any claim arising from that vehicle, whether due to accident, theft, or third-party injury, may be rejected outright on the basis of misrepresentation," says Smit.
Ann Cloete from insurance brokerage and risk advisors Aon South Africa says while earning extra money by delivering food as an Uber Eats driver or transporting passengers sounds appealing, it's important to be informed about the associated risks.
"Many vehicle owners might not realise that using their personal vehicles for commercial purposes without proper insurance coverage can expose them to significant liabilities and damages,” says Cloete.
According to Smit, in insurance terms, material misrepresentation occurs when a policyholder provides false, incomplete, or misleading information to an insurer, whether at policy inception, renewal, or claim stage.
“This means that even if a driver initially insured their vehicle for personal use but later began using it for e-hailing without informing their insurer, they still risk having a claim declined," says Smit.
Smit notes that once a vehicle is used to transport fare‑paying passengers, its risk profile changes significantly. “From an insurance perspective, the vehicle is no longer being used for private or general business purposes, but for fare-paying passenger transport, which carries significantly higher exposure," he says.
Smit says another common misconception is that standard business-use vehicle insurance automatically covers e-hailing activities. Smit says this is not necessarily the case.
“The moment a driver accepts a ride through an e-hailing platform, the vehicle is effectively operating commercially, and a standard business policy does not automatically extend to cover this," he says.
According to Cloete, the goal is to ensure that the cost of using your vehicle for paying passengers or cargo doesn’t outweigh the benefits.
"It’s essential to speak with a broker who can provide an insurance solution with variable excesses based on the driver’s needs. Remember, the coverage is linked to your risk profile, requiring you to be a responsible driver who adheres to road rules and avoids distractions like texting while driving,” she says.
Beyond the risks to drivers themselves, Smit adds that insurance brokers also have a responsibility to ensure clients are properly advised when vehicles may be used commercially. “From a broker’s perspective, proceeding with personal lines cover while aware that the client intends to use the vehicle commercially, even at a later stage, exposes both the client and the broker to unnecessary risk,” he says.
“Insurance works on the principle of full disclosure. Drivers must ensure that their insurer knows exactly how their vehicle is being used so that the correct cover is in place. While commercial cover may cost slightly more upfront, it ensures drivers are protected should something go wrong.” Smit says.
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