Motor vehicle insurance has been described as a necessary evil – even if you pay cash for a motor vehicle or if you think you are the most cautious of motorists, with more than 10 million cars on the road in South Africa it is crucial to be insured and you are at great financial risk if you drive an uninsured vehicle.

Why do you really need Car Insurance?

Having a good insurance policy puts your mind at ease as you drive and this in itself is one of the biggest vehicle insurance benefits – peace of mind that should you be in an accident, have an unpredictable ‘oopsie’ or have your car stolen, you are covered!

The South African vehicle hijackings and road crash statistics provide more than enough evidence to the importance of vehicle insurance. Over the last couple of years the cost of repairs has increased dramatically and there has been a significant increase in the average cost of a claim. An increase in vehicle theft, accidents and rising repair costs force insurance companies to recalculate the risk and cost of insuring our vehicles.

with more than 10 million cars on the road in South Africa it is crucial to be insured

With South Africa’s high accident and car theft rate, you cannot afford to drive an uninsured vehicle. According to the South African Insurance Association (SAIA), about 65 percent of South African motorists are not insured.
This has far-reaching implications for all road users, whether or not they are insured.

If you are an uninsured driver, you alone are responsible for covering the costs of repairing your car or even buying a new one if it is seriously damaged. You will also bear the legal costs of trying to claim damages from another uninsure driver without the assistance of an insurer.

The ABC’s of Car Insurance

Motor vehicle insurance is essentially a contract in which an insurance company assumes financial responsibility for any loss the insured may incur through damage or theft to his/her vehicle. The bottom line is that you must read your policy and the schedule and make sure that you clearly understand the terminology, terms and conditions, and any exclusion clauses.

The Two Golden rules of car insurance –

• Know the promise you’re buying :
  When you buy insurance you buy a promise. For years or even decades you may pay your insurer to say: “In certain circumstances that may never arrive, I will give you certain things.” You need to be sure of what these circumstances are and what you will gain from the cover.
• Keep the promise you are making :
  When you buy your insurance you give your insurer much personal information such as your habits and the ways you will use the items you are insuring. If the information is wrong, sometimes even a little bit wrong, the insurer’s promise won’t hold up.

When you buy insurance you buy a promise.

It is the insurer’s job to pay you what you are due and not more. It’s important to understand why you are paying a specific premium to insure your car. When your car is stolen, damaged or written off in an accident, the insurance provider will pay out an amount based on a variety of factors that are determined beforehand.

These factors include –

1. The model and make of your vehicle that is insured, the age of the vehicle as well as the condition that it is in, and the replacement value of the vehicle in question.
2. If your car is damaged, the normal procedure is the insurer will establish whether the quote to repair your car is reasonable and will ensure that all the damage is repaired. Generally, the insurer will write-off your vehicle if the cost of repairing your vehicle exceeds 70 percent of its value. In this case, the insurer will pay out the vehicle’s market value or retail value, depending on the terms and conditions of your contract.
3. Market value, which is what most insurers pay out, is the average of the retail and the trade value. Retail value is the price you pay to buy your vehicle, whether new or second-hand, from a dealer. The trade value is what a second-hand dealer will give you if you trade in your car.
   If your insurer pays out market value, the amount will not be enough to replace your car with a new one.

Types of Car Insurance

The vehicle owner needs to be aware of the variety of vehicle cover options. Here are a few options –

• Comprehensive Cover: covers your vehicle for accidental damage, theft and hijack, as well as injury to other people or damage to their vehicle in an accident
• Balance of Third Party, Fire and Theft Insurance- provides you with cover for damage to the other party’s vehicle in the event of an accident, and for your vehicle in the event of loss by theft, or fire.
• Balance of third party is the most limited form of cover. It does not cover you for damage to, or the loss of, your own vehicle, but it covers the costs of damage to the other car in an accident you cause
• Limited Cover: covers your vehicle for damage caused by fire, theft and hijack, as well as injury to other people or damage to their property, Accidental damage to your vehicle is not covered.
• Liability to Other People: covers you for liability to other people where an accident caused death or injury to them or damage to their property.
• Essential Cover: no frills option for older, lower value vehicles where you choose the combination of and amount of cover that you need.

Policies may also include a wide range of added options and benefits.

OK, so you do need Car Insurance – what now?

• Do your research and shop around.  Get at least three comparative quotes.
• Don’t make a decision based on the premium only – make sure you know about hidden costs such as additional excesses.
• Consider the insurer’s reputation for service, price and claim settlement turnaround times.
• Make sure the company you choose is a registered Financial Services Provider. You can verify its registration with the Financial Services Board which regulates all insurance companies.
• Take time to discuss the details of your insurance policy with the direct insurer or broker.
• Compare apples with apples.  This means, for example, checking if your vehicle is covered for retail or market value and ensuring the excesses are similar.
• Make sure you buy insurance from a reputable company- otherwise you may find that your cover is not worth the paper it is written on when you make a claim. Remember that you have a right to make an informed decision – demand all the information you need before signing a policy application!

Let’s not meet by accident 

Contact Salvo Capital to see how much you can save on your short-term Insurance today. We offer tailor-made solutions to each of our clients.  Every client is unique and so are your insurance needs.

We’ll give you peace of mind, for wherever the road takes you.

 

Source : Arrive Alive