INSURANCE: Santam Creates Concession for CO2 Emissions Tax
Recent Gauteng Business News
Following the introduction of the CO2 emissions tax this year, South Africa’s leading short-term insurer Santam has announced it will make special concession for insured vehicles bought prior to 1 September 2010. In cases where a vehicle qualifies for total replacement, the insured will not be penalised for any shortfall on insured value due to the introduction of the CO2 tax component.
Emissions tax is aimed at encouraging vehicle owners to purchase more fuel efficient cars to lower CO2 emissions. The tax is calculated at R75 per g/km of CO2 emissions for every g/km above 120g/km. The tax translates roughly to between R5 000 and R10 000 increase on the overall price of a new vehicle. While the manufacturer is responsible for paying the tax to SARS the consumer ultimately carries the burden of the tax as it’s included in the cost of the vehicle.
Lourens Joubert, Head: Commercial Underwriting says: “CO2 emissions tax has been introduced to combat and decrease the ever-increasing levels of greenhouse emissions across the globe by incentivising motorists to purchase vehicles that are more environmentally friendly. The increasing level of CO2 emissions is a big problem. Globally, there is an estimated 600 million vehicles that emit over 900 million metric tons of CO2 each year. Vehicles account for 15% of fossil fuel emissions and this figure is expected to triple by 2020.”
“The insurance concession by Santam is designed to ease the burden on the insured by including the tax value for vehicles bought prior to September 2010 as many insureds may be underinsured for the tax component which was not added to the value of a vehicle prior to implementation of this tax,” says Joubert.
Vehicles bought after the introduction of the tax do not qualify for the concession as the purchase price will include the CO2 emissions tax component and policy holders should insure for this value. At inception, the tax will only be applicable to sedan vehicles but will apply to LDV (Light Duty Vehicle) models at a later stage. This incentive will be valid for both personal and for commercial vehicle owners.
“Brokers are advised to verify with the concerned insurer the exact terms adopted after the introduction of CO2 tax, as most insurers may not compensate for the tax if it’s not included in the value of the vehicle. The broker is obliged to advise the client that, in case of total loss, not all insurers will be willing to fully compensate the insured unless the policy is adjusted accordingly,” explains Joubert
Government is yet to announce the possible impact on pricing of second-hand vehicles. As standard procedure, Santam uses the Trans Union Auto Dealers Guide to determine the market value of vehicles. The impact of the tax on second-hand vehicles will therefore be correctly reflected in the Trans Union guide.
Business News Sector Tags: Motoring| Insurance|