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Car Insurance Absolute Basics

Posted on 2016-09-23
Car Insurance Absolute Basics

Many consumers of motor insurance do not understand what exactly is covered when taking the different types of motor insurance classes. Most drivers and vehicle owners buy because it is a legal requirement as per the Kenya Traffic Act Chapter 405. In many countries like South Africa, USA (states like Virginia), motorists don’t require to be insured to be on the road. In this series, let us go through the absolute basics of motor vehicle insurance in Kenya.

What is motor Insurance?

Motor Insurance covers you against loss or damage to your own vehicle(s) arising from accidental fire, theft, road/ traffic accident, bodily injury or death to third parties, third party property loss or damage etc. Insuring motor vehicles against third party risks is compulsory in Kenya and it is an offence for any person to use a motor vehicle on Kenyan roads without the minimum liability protection provided by third party motor vehicle insurance.

How does motor insurance work?

When you buy motor insurance, you contribute a sum of money called premium into a common pool of funds contributed to by other motorists. The losses suffered by the unfortunate few are ultimately met by the contributions of lucky majority.

Contributions into the pool have to be adequate to meet all losses suffered in any period and cover the other costs of operating the company, paying commissions as well as generating profit for the insurer (the company which administers and manages said pool).

How many types of motor insurance are there?

There are three main types of motor insurance in Kenya

  1. Third Party Only (TPO) - protects you against the third party risks and liabilities including death, bodily injury and/or property damage. This is the commonest car insurance product in Kenya.
  2. Third Party Fire and Theft (TPFT) protects you against third party risks, fire damage, theft and damages that happen as a result of an attempted theft e.g. broken door locks or a stolen radio. TPFT is the least common auto insurance product in Kenya, owing to its relatively high premium rates compared to the scope of cover it provides.
  3. Comprehensive Motor Insurance - This protects you against third party death, bodily injury and/or property damage as well as loss and/or damage to your vehicle itself from road accidents, fire, theft, acts of nature (earthquakes, floods, storms etc.), civil commotion.

Who is a third party?

A third party is a person who is injured or has suffered loss or damage as a result of an accident caused by your motor vehicle provided he/she is not riding in the given vehicle. A third party may be a pedestrian, a passenger{s} in your or another vehicle.

The first party to a motor insurance is you, as the vehicle owner while the second party is the insurer.

What is indemnity?

Indemnity is one of the key principles of insurance. Indemnity is about putting you back to the same financial position you were immediately before the loss occurred. Indemnity only operates under non-life and not life insurance given that you can’t replace life. Under indemnity, the beneficiary is not permitted to profit from insurance but to have the loss replaced.

What is excess in insurance?

Excess is the uninsured portion of the loss that you the insured have to pay before the insurer pays the loss. Excess is expressed as a percentage of the sum insured and is paid to the insurer in case of loss or damage to your vehicle. Excess is normally agreed in advance and contained in the policy. For example, if your vehicle is insured for say Ksh. 400,000 and the excess is 5% of the sum insured, the excess amount payable will be Ksh. 20,000. When looking for auto insurance quotes, it is always strongly advised to take include an excess protector add-on to the comprehensive cover.

Can I sell my vehicle with the insurance certificate?

The certificate will be invalid once the vehicle is sold to another person. The new owner must take a new insurance cover for the vehicle. This is because the insurance contract is only valid between you and the insurance provider while you are the rightful owner of the insured vehicle.

What is not covered in motor vehicle insurance?

  1. Your (the driver) own death or bodily injury following a motor accident.
  2. Damage to tyres unless the vehicle is also damaged at the same time.
  3. Consequential loss, depreciation, wear and tear, rust and corrosion, mechanical or electronic breakdowns, equipment or computer malfunction.
  4. Loss or damage occurring outside the geographical area although some third party liabilities may be covered under the East Africa Yellow Card scheme.
  5. Loss or damage caused by or due to cheating
  6. If you or any person with your consent is not licensed and or authorized to drive the vehicle.
  7. If you or the authorized driver drives whilst under the influence of alcohol.
  8. Loss or damage or liability caused by the vehicle being used for an unlawful purpose.

What should I do when am involved in a motor accident?

If you are involved in a motor, the golden rule is not to panic. Try to stay calm at the accident scene. We have a comprehensive insurance claims process, the general steps to take are as follows;

  1. Obtain the following details related to the accident: Names and addresses of all drivers and passengers involved; registration number, make and model of each vehicle involved; Third party’s driving license numbers and insurance policies and motor certificate numbers; Names and addresses of as many witnesses as possible.
  2. Take precautionary measures to prevent further damages and injuries including calling the police and moving the vehicle to a safe place.
  3. Lodge a report with the police within 24hrs of the accident.
  4. Notify your insurer as soon as possible.
  5. Send all supporting documents to your insurer.
  6. Obtain and complete the claim form and submit the same to your insurer.

The following documents will be required;

  1. Police abstract report
  2. Driving license
  3. Your statement about the incident

Where can I buy my car insurance?

You can get quotes for your motor vehicle insurance from all leading insurance companies by visiting their offices and branches, via telephone and phone. Several insurers also sell their products and services online making it easier and more convenient. In addition, they may offer discounted prices online allowing you to save money on your premium rates.

The new way to buy auto insurance is using price comparison websites, they partner with all the leading providers, allowing customers to quickly and easily compare prices, benefits, exclusions, terms and conditions at the convenience of their fingertips.

Why choose as your insurance partner?

  • We transform you into a hero.
  • We assist you choose the right product with the highest degree of self-service.
  • We walk with you throughout the course of the contract.
  • We deliver with fastest speed.
  • We offer ‘Toll free’ number to talk to our friendly customer care team.
  • You can as well request for a call back.

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