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It’s the festive season and the year-end parties are mounting up. But be careful not to over- indulge – because not only is drunk driving against the law but if you’re involved in an accident your insurance probably won’t pay out. What’s more, alcohol abuse also impacts on long-term insurance cover, such as life policies. Let’s look at how over- indulging affects your insurance.
Car insurance
No payouts
when you drive under the influence, you’re committing an offence and your insurance company is under no obligation to honour your claim. Even
If you’re just fractionally over the legal alcohol limit and you drive your car and are in an accident, your insurance company doesn’t have to pay out your claims. Even if the accident wasn’t your fault.
This also applies to third-party insurance, says Dawie Loots of MUA Insurance Acceptances. Although you’re insured for damage to the other person’s car, your insurance isn’t obliged to pay out.
You might have to pay for the repairs to your own vehicle and be held liable for the damage to the other vehicle. You might also have to pay legal costs and both parties’ medical expenses.
Higher premiums
The insurer might agree to pay your claim, but can still increase your monthly premium because you’ve become more risky to insure as a result of the drunk-driving incident.
Cancellation If you’re convicted of drunk driving, your in- surer could cancel your vehicle insurance, Loots says. In that case you might struggle to get vehicle cover elsewhere.
Know this
The insurer isn’t responsible for conducting the blood test to check if the legal alcohol limit has been exceeded. The police are in charge of blood tests, and refusing to take the test is a criminal offence.
You can't rely on a Road Accident Fund payout; this fund can also decline to pay out in the case of a drunk-driving accident.
Life insurance
If the policyholder dies while driving a vehicle under the influence of alcohol or drugs, he was driving illegally. Again the life assurer has no obligation to honour claims and then the policyholder’s beneficiaries won’t get a payout.
But there must be a direct connection between the alcohol or drug consumption and the accident, and it has to be the fault of the insured. alcohol or drug dependence or already has a liver disease, the insurer can request liver function tests, liver biopsies, scans and other tests to determine the damage to their liver.
The premium applied will depend on whether the tests show any damage and the extent of it. If you have severe liver damage your application for cover might be rejected, or you might get cover with death due to alcohol-related illness excluded.
Higher Premiums
Heavy drinkers also pay higher premiums for life insurance. The reason for this is that they’re more at risk health-wise than people who drink less.
When you take out a life policy the insurer will want to know how much you drink currently and used to drink in the past. Dr Thabani Nkwanyana, medical officer at Liberty Life, says drinking six or more units of alcohol a day is regarded as risky alcohol consumption, according to standards prescribed by the World Health Organisation (WHO). For example, just 75ml red wine equals one unit.
Risk is assessed on an individual basis and your premium is determined accordingly. Nkwanyana says if a person has a history of providing incorrect or incomplete information when you apply for insurance is referred to as non-disclosure or misrepresentation.
It’s one of the most common reasons why claims are rejected. Statistics of the Association for Saving and Investment South Africa show that life assurers last year turned down claims worth R332 million, with 55,3% having been rejected due to non-disclosure.
Full disclosure is when you provide all the information asked for on the application form concerning your lifestyle, state of health and the medical histories of you and your close family. When a person doesn’t disclose a health condition, they’re insured on an incorrect risk profile.
