Understanding the outstanding debt policy on your vehicle

Brian Joss – The car-buying journey is certainly an exciting one. However, with the excitement, it is important to ensure that all the paperwork involved in the purchasing process is in order.

One such element is making sure that the car is comprehensively insured, whether the car is financed or not. This is a vital safety net for you as the car owner.

Under the current economic circumstances and with extra budget pressures, vehicle owners might consider cancelling their vehicle insurance policy to save money. However, the risks involved in not having any form of vehicle insurance far outweigh the perceived short-term savings by either cancelling an existing policy or not taking it up in the first place.

If the vehicle is financed through an approved financial services provider, comprehensive insurance cover is a prerequisite and a contractual obligation. A customer is required to purchase and maintain comprehensive short-term insurance on the vehicle for the duration of the credit agreement. If a customer does not have comprehensive cover in place, WesBank can assist with temporary cover in the form of its Outstanding Debt Policy (ODP).

This type of insurance cover is limited, and does not provide cover for third-party liability. This means that the vehicle owner will be responsible, if found liable, for damage to another vehicle following a vehicle accident.

Without ODP or comprehensive vehicle insurance cover, the customer remains responsible for the outstanding balance on the finance agreement in the event of an accident, theft, or total loss. Total loss is where the vehicle is written off or stolen and not recovered.

This policy can be loaded onto your contract to protect you and your vehicle if proof of comprehensive insurance has not been provided to the bank, or if you have subsequently cancelled your insurance. The bank will put the ODP in place until such time as you are able to take out comprehensive cover once again.  The monthly premium for this cover will depend on the amount outstanding on your finance agreement with WesBank. Your monthly instalment will increase because the ODP premium will be added to your monthly vehicle instalment amount.

Customers who elect to sign up for the ODP limited insurance cover from the bank will also benefit from two useful services: the CarLicence Renewal benefit is an SMS and email reminder sent 45 days prior to your vehicle licence’s renewal date, with a link to the WesBank renewal web page. The reminder also includes any outstanding fines or penalties owing on your vehicle, and CarLicence can arrange for the issuing and delivery of your new vehicle licence.

The second service you can access is Project HELP, a security and emergency medical service, that offers a state-of-the-art crisis management centre, armed reaction units, a panic button on your phone and location tracking.

“Customers are entitled to select the vehicle cover best suited to their needs and financial means. As a vehicle finance institution, we have a responsibility to educate and guide our customers through the process of purchasing and insuring a vehicle. While cancelling a vehicle insurance policy, or not insuring the vehicle at all, might seem an option during tough times, this choice could result in very expensive consequences for an uninsured owner in the unfortunate incident of an accident or total vehicle loss,” says Lebogang Gaoaketse, WesBank’s Head of Marketing and Communication.

CAPTION: Work it out: selecting suitable cover. Picture: Motorpress

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