What car insurance is right for you

What car insurance is right for you?

There are many car insurance products out there and it can become a bit overwhelming deciphering what they all mean, which can make it hard for you to decide whether it’s something you should consider getting or not. So then, what car insurance is right for you?

Ask yourself this: If your car is stolen or written off, can you replace it in cash? Or if you had to bump into a fancy new Merc or BMW, and the owner of that car held you responsible for the damages to their car, would you want to spend the rest of your life paying that off? If you’re leaning towards “No”, then take a look below. I’ve briefly unpacked what car insurance is out there, and what the best option for you might be.

The most basic and cheapest form of car insurance is third-party liability cover

Fun fact: In most countries around the world, third-party liability cover is a legal requirement if you want to drive, but not in South Africa.

Third-party liability cover aims to protect you from being held liable for damages to another person’s property. ‘Third-party’ refers to the person who holds you responsible for damage caused to their property by your car.

In practice, what often happens is that the owner of the car you damaged will put in a claim with their insurer, who will then take legal action against you to recover the damages you caused. Third-party liability cover will protect you in scenarios like this in that your insurer will take care of everything on your behalf.

Think of it as protection for everything that your car might damage while you are driving it, except for the car itself. And the best thing is that it only costs around R60 or R70 a month – that’s only two or three cappuccinos, if you think about it.

Comprehensive cover

Comprehensive cover is (you guessed it!) the most comprehensive car insurance you can get and is required if you’re buying a car through the bank.

Comprehensive car insurance covers you for loss or damage to your vehicle caused by hijacking, theft, Mother Nature, fire, lightning, explosions, and malicious or accidental damage. It will also cover you if you damage someone else’s property and they sue you for the damages.

Why does the bank make it mandatory that you have comprehensive insurance?

If your car is written off or stolen and there is still an outstanding balance on your loan, it often means that you will have to pay off the loan while possibly paying for a new one. In this instance, it can sometimes be impossible to pay off both debts, which in turn can see you in debt indefinitely and unlikely to be lent any money in the future. Comprehensive car insurance will cover you in cases like this.

But that’s not all! Many insurers offer added extras and benefits with comprehensive cover. A few of the most popular benefits include:

  • Cover for loss of keys and remote controls;
  • Emergency repairs;
  • Transport, towing, and storage; and
  • Roadside assistance.

Here are a couple of the most common extras you can personalise your cover with:

  • Car hire;
  • Credit shortfall, to make sure you can pay off your car loan fully when your car is irreparably damaged (written off) or stolen;
  • Cover for things like tow/bull bars, fancy lights or sound systems; and
  • Cover for your tyres.

What to do when it comes to claiming

An insurance claim is when you make a formal request to your insurer to cover the damages after something bad has happened to your car or after you have damaged someone else’s property with your car.

Your insurer will need proof of the accident/loss

In order for your insurer to pay for the damages, they will need proof of the accident. Your premiums will also have to be up to date.

What happens if the accident wasn’t your fault?

  1. You can claim directly from your insurer and they will approach the insurer of the person responsible (if they have insurance).
  2. You can choose to claim directly from the insurer of the person at fault.
  3. If the person at fault doesn’t have insurance, you can approach them directly and ask them to pay for the damages themselves.
  4. If the damage costs less than your excess, you can try to recover the damage from the responsible person via the Small Claims Court. (Note: Claims have to be smaller than R20,000 in order for you to go this route.)

The four most common reasons for a claim to be rejected

  • If your car is not roadworthy, especially things like tyre tread, brakes, and headlights. (Even if the event that caused the claim is covered);
  • If you were involved in an illegal activity like using your car in a robbery or driving under the influence of alcohol or drugs;
  • If you’re using your car for commercial purposes and you’ve never told your insurer (e.g., You use your car to transport stock from your business); and
  • If you continue to drive your car after an accident and further damage it.

A couple of tips to help you choose the best insurance for you

  • Choose an excess you can afford. The higher your excess, the lower your premium will be. But keep in mind that if you end up having to claim, you will need to have your excess on hand in order for your insurer to cover the damages. Think of it as your contribution to the claim. One way to calculate an appropriate excess is to determine the maximum amount you can comfortably afford to pay out of your pocket if you had to make a claim tomorrow.
  • Shop around. Get a diverse range of quotes from different insurers and be sure to ask about the excess and if there are any additional excesses you need to be made aware of. Keep in mind that some insurers will often load your premium and only give you their best price if you negotiate hard or threaten to leave, while some insurance providers, especially those that offer digital, instant cover, will give you the best price upfront.
  • Make sure you know what value your car is insured for. It all depends on the insurer you go for but cars are usually insured for either retail value, market value (less than retail), or trade-in value (less than market value). Obviously it’s much better to be insured for retail value.
  • Pick a third-party limit that’s enough. R1-million often isn’t enough if you are involved in an accident with an expensive car.

Obviously, the most ideal situation is to have as much cover as possible. But realistically, you should take your personal situation into consideration – decide how much cover you can actually afford and what to prioritise. For every person, in every financial situation, priorities are different, but going without the core insurance could be more costly in the long run!

Get an instant & final car insurance quote from the company that I use myself.

P.S. If you’re looking for more information, Naked has covered all there is to know in this piece on car insurance.

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