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Legal & Logbooks9 min read

Understanding Car Insurance Underwriting rules

A practical guide to comprehensive covers, valuations, and claim payouts

Amina Yusuf•
Understanding Car Insurance Underwriting rules

In Kenya, driving a vehicle on public roads without valid insurance is a criminal offense. However, many drivers purchase policies simply to comply with the law, without understanding the terms of underwriting. When an accident occurs, they are shocked by claims rejections, high deductibles (excess), and under-valued write-offs. This article explains how insurance underwriters assess vehicles and how to secure the best coverage.

Third-Party vs. Comprehensive Policies

Kenyan law requires a minimum of Third-Party Only (TPO) insurance, which covers body injury and property damage to other road users, but offers zero financial compensation for damage to your own car. Comprehensive Insurance covers third-party liabilities plus damage to your car from accidents, fire, theft, windstorms, and vandalism. Comprehensive cover is strongly recommended for assets over KES 600,000.

How Underwriters Calculate Premiums

Insurance premiums in Kenya are calculated as a percentage of the vehicle's value, typically ranging from 3.5% to 5.5% annually. Underwriters adjust this rate based on risk factors:

  • 1. :
  • 2. Driver's age and experience.
  • 3. Car type: High-performance cars or models popular with taxi drivers (e.g., Toyota Fielder/Probox) attract higher rates.
  • 4. Security features: Installing a verified GPS tracking system can lower your premium.

The Excess Clause: Your Out-of-Pocket Expense

The 'Excess' is the first portion of any claim that the vehicle owner must pay. Underwriters include this to discourage small, trivial claims. In Kenya, the standard excess is 2.5% of the vehicle value (or a minimum of KES 15,000 to KES 20,000). You can purchase an 'Excess Protector' rider for an extra premium to eliminate this deductible, ensuring the insurer pays 100% of the repair bill.

Why Annual Valuation Matters

Cars depreciate every year. In the event of a total loss (write-off or theft), the insurer will pay the current market value at the time of the loss, not the value stated on your policy when you signed up. If you do not perform an annual valuation, you will pay high premiums based on old values, but receive a lower payout. Always perform an annual valuation with an approved service like AA or Regent.

How to File a Successful Claim

If an accident occurs:

  • 1. :
  • 2. Do not admit liability at the scene.
  • 3. Take clear photos of both vehicles and the surroundings.
  • 4. Report the incident to the nearest police station and obtain a Police Abstract.
  • 5. Notify your insurer or broker within 24 hours.
  • 6. Submit the Police Abstract, a copy of your driver's ID, and a completed claim form. Never authorize repairs before the insurance assessor inspects the vehicle.
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