With the increase in the fuel price now breaking through R20 a litre, and with peak time traffic being a nightmare, it makes sense to try carpooling to save money. Another important benefit of carpooling is that you combat the boredom of being stuck in traffic alone in a vehicle and decrease your carbon footprint. After all, less cars on the road equals less pollution.
What’s more, with apps such as CarTrip and Ugomyway helping you to share a ride with people who are travelling the same way as you are, you can offset some of your running costs. It is however important to understand the effect this can have on your car insurance, so here’s what to know and what to watch out for.
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 things 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 will have to 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. So 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. Passengers should know that they will be unable to claim from you for bodily injury in the event of an accident but will have to claim from the Road Accident Fund.
- Side hustle carpool: With apps like Carpool, you could use your car to earn some cash on an upcoming trip, accepting cash from strangers to share a ride with you. 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 will have to 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.
Whichever carpooling scenario you choose, it’s a good idea to let your insurer know if anything changes in your regular driving set-up as this can affect insurance cover 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 involved in an accident, your claim may be rejected.
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.
Insurers have different definitions of what defines a ‘lift club’. In the case of Santam, where 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.
Speak to your intermediary if you have any questions about your car insurance.