Car Insurance - How to make the correct decision
"A guided journey through the world of car insurance"
South Africa has the worst drivers. If you drive daily on South African roads you are likely to have thought this at some point while driving. People take chances, they speed and they couldn’t care less about you or your car. In a 2013 report by the International Transport Forum, over R 307 billion was spent on vehicle related catastrophes on South African roads.
During this same period there were 58 312 car thefts and 139 572 smash and grab incidents. Did all of those who make up these mind boggling statistics have car insurance? Probably not, in fact it is quite likely that those who cause accidents are not the ones who have insurance. It doesn’t matter how careful you are on the roads, you cannot go without motor vehicle insurance. Car insurance will give you peace of mind even if it cannot save you from having an accident.
5 Tips How to Save on Insurance!
- Shop Around.
- Before You Buy a Car, Compare Insurance Costs
- Take Advantage of Low Kilometer Discounts
- Buy Your Car Insurance From the Same Insurance Company
- Maintain a Good Credit History
Only 35% of all vehicles on South African roads are road worthy!
Take a look at what insurance really is
If you are reading this you are one smart person, I like you. Really, you are clever, because unlike so many others you are taking the right steps towards protecting one of your most valuable and maybe even prized assets. You have a 1 in 101 chance of being involved in a car accident when driving in South Africa. Doesn’t sound like an exceptional chance? Stop reading for a moment and consider just how many people you pass on the roads each day. On your way to work? Dropping your children off at school? Driving home at night? When you start adding up the amount of cars that pass you on the roads, those numbers are sure to pass the 101 mark. Now think of how many times you have sworn at a bad driver or how many times you have had a close call.
Car accidents are a terrifying reality and even the most minor crash is costly to fix. And let’s face it, today’s living doesn’t let you fork out thousands of Rands at will for repairs or a full replacement. This is where having car insurance that you can trust becomes so important. Many would say that going without car insurance is like playing Russian roulette with your finances.
So what is insurance? Insurance is a transfer of risk in exchange for money. You pay your insurer for protection and compensation in the event of your car being damaged or destroyed. Before we get into a discussion on car insurance, and certainly before you begin your journey through our comprehensive directory, you need to have a grasp on some of the basic terminology that you are going to come across.
Here are a few words and terms you need to be familiar with:
- Insurer: person selling an insurance policy. This term can also be attached to an insurance company.
- Insured: the person who has bought insurance is known as the insured.
- Liability: a person, behaviour or characteristic that can have you at a disadvantage. For example, men who are under 25 are usually seen as a liability to insurance companies as they are considered to have risky behaviour.
- Loss: the amount of money the insurance company will pay on claim.
- Named driver policy: a driver, other than yourself, who is allowed to drive your vehicle.
- Premium: The amount of money you pay each month on your insurance.
Why you need motor vehicle insurance
In South Africa, motor vehicle insurance is an important policy to have regardless of how often you are on the roads. Car insurance will be your biggest protection against the financial implications of a traffic accident or in the event of your vehicle being stolen. Motor vehicle insurance can be taken out for motorcycles, motor vehicles and trucks, providing coverage should the vehicle be involved in a traffic accident or should the driver be held liable for any accidents caused. The financial protection provided by the insurance can be used for physical protection of the vehicle as well as providing coverage in the event of a motorcar accident.
Motor insurance benefits both the owner of the car and those who are sharing the road with the car owner. In South Africa having insurance for your car is not a legal requirement, it is a choice, and it is one that numerous South Africans choose not to have. But luckily policy coverage is not just extended to those who you might drive into, your insurance will even protect you should you not be liable for the accident.
Hit and runs are so common on our roads and the sinking feeling that having an accident will leave you with is as traumatic and upsetting as being involved in an accident that was not your fault. Someone rear ending you and pulling away from the accident at break neck speed can only tell you one of two things; the driver at fault has no driver’s license or they have no insurance. And while sadly there are too many South Africans climbing behind the wheel without a valid license, these same drivers are unlikely to have an insurance as you cannot have car vehicle insurance without a valid license.
There are many factors that make having insurance so important. And we haven’t even mentioned how important it is to have insurance if you have been responsible for a traffic collision. No one can predict the severity of an accident, some may leave you injured while others can result in death. Negligence is the most common reason for severe accidents happening, with speeding and taking risks falling under negligence.
Consider this for a moment: You’re driving down a long road and decide to change the music. Taking your eyes off the road for a second, you don’t see the car in front of you suddenly slow down. In an instant your world is upside down and then it all goes quiet. You have slammed into the car in front of you and upon opening your eyes you can see the amount of damage to both cars is almost total. It was unexpected, you took your eyes off the road for an instance and now you are facing a new hurdle in your life. This is a scenario that can happen to anyone and this is what makes having insurance so important.
Even if you don’t want to sign up for full insurance cover, the minimum that you should invest in is liability cover. In this case you will have cover for when you have been responsible for causing the accident.
Did you know?
In our country we are lucky enough to have the Road Accident Fund. This fund has been set up to assist those who have been involved in a traffic collision, one that was not their fault, and now they need assistance in their recovery. The Road Accident Fund however does not cover damage done to cars, so again having the right insurance is important.
Let’s get into insurance in South Africa
Okay so by now you should know that going without insurance for your car is potentially devastating mistake. While you might feel like you will never be involved in an accident, fate should never be so blatantly tempted. Driving your automobile on the road is always going to carry a risk. But let me tell you a little something about car insurance in South Africa, it isn’t all expensive and cheap insurance options don’t exactly mean unreliable.
Did you know that only around 35% of South Africans have insurance? - AA
Did you know that male drivers are the ones who are having the most serious traffic collisions? This is one of the reasons why men under 25 are paying a lot for insurance for their ride. It is generally considered that men under 25 drive faster, more recklessly and their behaviour on the roads is generally considered to be a gamble. Car insurance in South Africa takes a number of things into consideration and this means that some people are going to be paying the same amount of money for their insurance policy.
So what factors affect South African car insurance?
- Your age. As I mentioned above, the younger you are the less trustworthy you are in the eyes of an insurer. Yes it is a terrible generalisation as of course you might be a perfectly reliable 24 year old, but insurance company’s look at the statistics and paint everyone with the same brush. Even the best insurance company is going to take your age into consideration.
- Your gender. Again as already discussed, young men have a tougher time getting insurance although young women are not as likely to face such challenges. And again it isn’t fair but the insurer is relying on statistics to guide them. And the statistics say men cause more accidents than women.
- Your driving history. Would you insure yourself if you have caused a number of accidents? The fewer accidents you have been involved in, and the time
between the accidents, will have an influence on the premiums you end up paying.
- Your marital status. Do you think that your marital status should have an effect on your premiums? It might not make much sense to most, but whether you are married or not can have an effect on your insurance. Married people are generally considered to be more responsible than those who are single or just dating.
- Your neighbourhood. This factor makes a lot of sense. If your car insurance is covering theft and you live in a dodgy area, it is understandable that your insurance might end up costing you a little bit more than your friend living in a safer area of town.
- Your daily distances. The more often you are on the road and the period of time that you spend on the road on a daily basis can affect how much you pay for insurance. The business man on the road all day everyday can expect to pay higher premiums while the person relying on public transport, only using their car on rare occasions might not be expected to pay as much.
- Your car. Lastly your car and its age play a role in your insurance. If you are driving an older model you might not be able to get your car covered for damage caused by accidents. This is mostly because finding spare parts will be both expensive and difficult. And the fancier your car is, the more you are likely to have to pay out as again parts will be expensive to buy. Replacement value will also be considered when this factor is brought in. What your car is used for is also an important factor, for example if your car is being used for delivery purposes, you might find your coverage payments increasing.
According to Old Mutual, one of the biggest car insurance providers in South Africa, there are 3 basic types of car insurance coverage
Comprehensive coverage for every car on the road would be the ideal, but many choose a different option as they don’t want to pay premiums associated with such an extensive and complete type of coverage. This insurance type will cover everything from hijacking and theft to damage or complete loss of the automobile. This type of cover will also protect you from many types of third party claims, should you be the one who caused an accident. Insurance for your car doesn’t have to cover accidents only, it can also cover acts of God, such as hail damage and damage or loss caused by other natural disasters. Ideally this is the type of insurance that you should have as it covers almost everything however as it is rather expensive. You have two other options to choose from though so carry on reading to find out about your other options.
Third party, fire and theft insurance
The difference between this type of cover and the comprehensive cover is that this cover does not pay out for accidents. Should your car be damaged in a natural event such as hail or fire, or if your vehicle is hijacked or stolen, you will be covered. You will also be covered should you have to make third party payments in the event of an accident. The down side to this insurance is that if you damage your car, by driving into an animal for instance, you will not be covered and will have to pay for the fixes yourself.
Cover for third party only
If you are only interested in the cheapest option for your insurance then the cover for third party incidents is the final option you have. This coverage will pay out should you be faced with a third party claim. It will cover costs relating to any injuries or deaths relating to an accident which has been your fault. The problem with this, especially in our country where so few people have insurance, is that any damage done to you and your car will not be covered by your insurance.
How automobile insurance works
The upside to automobile insurance and motorcycle insurance is that it is not all that difficult to get a grasp of. Understanding what it is for and how it works is the easy part, finding the right one that will suit all of your purposes is more complicated. With our insurance directory however, we have you covered in all things insurance so you really don’t have to be too concerned about who is going to give you the best cover and what it will include. So sit back, put your feet up, and pull your screen a little closer, I’m about to tell you everything you need to know about how insurance works.
- We all love our cars and we all place value on what we drive. It gets us to where we need to go and no matter what it looks like, as long as it is reliable, we love it. On the weekends it takes us outdoors and gets us adventuring, and every night when we safely drive up our driveway and park wherever it is that our car sleeps at night, we lock our car away snuggly. A bit of an over exaggerated scenario? Maybe. But for most of us, our car is more than a possession, it is something we work hard to have and to keep.
- So insurance is a must. You cannot afford to lose your car to theft or an accident. But with so many insurance companies out there, offering all types of policies, which let’s face it are so full of complicated insurance lingo, finding the ideal insurance can be very confusing. The biggest question that you will need an answer to is, “Which insurance is the right one for me and how will my automobile insurance work?”
- In short terms, insurance is paid for in monthly instalments and should you be involved in an accident or need repairs done to your car you will be able to make a claim with your insurer and an amount will be paid out to repair your car or the car of the third party driver. Car repair insurance, as it is sometimes known, will come in the form of third party, fire and theft insurance or it will be a comprehensive car insurance cover.
7 More Actionable Tips How to Save on Insurance!
- Assess Your Insurance Needs
- Ask for a Discount
- Shop Regularly for new Prices
- Carpooling can reduce your premium
- Only Buy what you need
- Consider a tracking device
- Ask About Group Insurance
South Africa is one of the most dangerous countries to drive in, dangerous both for your car and for your life. Our country has been named the 8th most dangerous country in the world to drive in.
5 Questions to ask before buying Car Insurance
1. Can I afford to pay the insurance premium once a month?
2. Does the insurance cover everything that I need to have covered? For example is it covering theft, accidents, acts of nature and third party claims?
3. Are the reviews for the insurance company favourable or are there more complaints than happy clients?
4. Did I ask about all of the terms, conditions and policies that are surrounding the insurance policy? Did I read the fine print?
5. Did I use a car insurance directory? (This is important as a directory will be able to help you compare all of your coverage options and help you make a choice on the right one for your needs.)