Whether you are shopping for a new car or already own a car, one of the most critical issues you face as an owner is insurance. If your vehicle is broken, hijacked, stolen or damaged in an accident, the unexpected costs of repair or replacement can be extremely high. Insurance is there to have your back.
In some countries, the law does not require drivers to have insurance when buying a car. However, if your car is financed in South Africa, you must have comprehensive car insurance.
In principle, car insurance is quite simple. As with any insurance (health, home, etc.), car insurance offers a financial safety net for the insured in case of damage or unforeseen expenses. That said, health insurance is a little different because, at one point or another, we all know that we will accumulate medical expenses.
Alternatively, with car insurance or at home, you only buy policies if you need them later. In most cases, you will need car insurance because most people get into car accidents, or their vehicle is damaged due to inclement weather, theft, or other forces beyond their control. If and when this happens, you will need to do what is known as an “insurance claim.”
What is a car insurance claim?
An car insurance claim is simply a request to your car insurance compensator. For the entire life of the insurance policy, the insured pays a premium set per month (or year) to the insurance provider.
When damages occur that are covered by the insurance policy, the insured can make a claim. The insurance provider then determines whether or not the application meets the requirements set out in the policy. In this case, the insurance provider determines how much compensation must be paid to the insured.
Whether the car is financed or paid for, insurance is an important consideration. Making an insurance policy is a significant additional expense, and there are many options to choose from.
“In addition to shopping for the most cost-effective insurance, it’s important to understand exactly what your insurance covers,” says Hong. “Vehicle insurance is not a one-size-fits-all product, and you have to make sure you get the right cover.”
When purchasing a policy for your new car, it is essential to understand exactly what the policy covers. Customers who finance their vehicles through car manufacturers can opt for comprehensive insurance for their vehicles, which includes items such as:
- Protection against claims resulting from damage to the vehicle or property of any third party
- Third-party requests from passengers
- Cover in case of theft, theft, burst, fire or total cancellation.
- Towing and storage costs
- Sound system and radio cover
- Windshield replacement cover
What is the price?
Insurance companies determine individual premiums based on several factors. The two most significant factors involve you and your vehicle. In essence, the insurer will consider your risk profile and the value of your vehicle – the higher the cost of repair or replacement, the higher the premium.
“Sports cars are generally more expensive to insure, and young drivers often pay higher monthly premiums than older, more experienced drivers, with a set safety record.
Insurers will review the type and price of your vehicle, your personal information, age, driving history and previous insurance record, if any. Your first monthly is based on all this information.
However, paying the premium every month does not mean that you will not have to pay anything in case of loss. You still have to pay for excess or insurance deductibles. The surplus is a fixed amount of which you are responsible for before repaying the insurance.
A higher excess means lower premiums and vice versa. The more you pay; the less you will have to pay for any damages. You can choose to pay the minimum possible first, but you can still cost a lot more.
Buy and consider the details of the various insurance policies. If you park your car regularly on the street or outside of office buildings, make sure you are covered for all types of theft. The policies differ, and some will cover the press, while others will not. So, decide what your risk areas are and buy an insurance policy that best suits your needs.
If you plan to own a car in South Africa, there are three different types of car insurance, from which you can choose to cover yourself or your car while driving in South Africa.
Comprehensive car insurance
This is the most expensive coverage, and if you get financing for your vehicle, the bank will insist on comprehensive coverage. This policy, as implied by its name, offers comprehensive coverage against fire, theft, collision, damage and hijacking. Comprehensive coverage will also cover you from third party claims.
Limited car insurance
Limited coverage is slightly cheaper than comprehensive coverage and covers you for theft, fire and diversion. It also covers you against third party claims, but you are not covered for your vehicle damage in the event of a collision.
Third-party car insurance
The cheapest of the lot, the third parties will only cover the damages caused to the goods of other people. This is not often a wise choice of insurance, except for really old vehicles, which are used only on very few occasions.
Insurers have recently introduced “pay as you go” insurance options for drivers who do not travel in excess. You can get comprehensive insurance on this plan at a much lower rate, determined by the average number of miles you drive per month.
Submitting a claim
If you are involved in an accident or another type of incident and need to apply, make it as soon as possible. Debt payments will vary depending on the claim you file. Usually, the insurance companies will deal directly with the dealer in case of theft or panel crashes in case of collision. The excess will have to be settled by you for the new or repaired vehicle to be released.
Making smart decisions about your car insurance means you understand the options. If you are a first-time buyer, it is crucial to take the time to find out what a car insurance policy covers, decide what type of coverage you need and look for the best policy. Doing this will give you the best chance of protecting your vehicle while still saving money on insurance