Car insurance is important because it covers your expenses when your car is damaged, stolen, or destroyed by fire. Without it, you will have to incur the cost of these events on your own.
Even though car insurance is not compulsory in South Africa, it may be required by creditors when financing your car.
Types of car insurance
Car insurance can be divided into three covers: third party, fire and theft, and comprehensive.
- Third party– This covers the damages caused by you to another person’s vehicle. It does not pay for the damages to your car. If you’re not the one who is at fault, you can also claim against the person who caused damages to your car and their insurance will pay. This cover is suitable for those who drive old or low-value vehicles.
- Third party, fire and theft– This is very similar to third party insurance, but it extends its cover to fire, theft, and hijacking. If you’re responsible for the occurrence of these events to someone else’s car, this insurance will cover the cost for you.
- Comprehensive– This is the best cover to have if you want to ensure that your car is also covered. It makes sure you are able to cover the costs incurred even if the incident was your fault. Comprehensive cover pays for repairs and/or replacement when your car is stolen, hijacked, damaged, or destroyed by fire. Or if you’re responsible for these events to a third party’s car.
How are the premiums determined?
There are many factors that determine your car insurance premiums. These include:
- The kind of car you drive: If your car is cheaper to maintain, your car insurance premiums will be lower. However, if you drive a car that is expensive to maintain, your premiums will be higher.
- Your age: Drivers who are younger than 25 usually pay more for their car insurance because they lack driving experience, and are more likely to cause accidents compared to the older drivers. This also applies to senior drivers.
- Your gender: Men tend to pay higher premiums compared to women because they are statistically involved in more accidents than women.
- Your marital status: Insurers have found that people who are not married are more likely to cause accidents than those who are married. This may not apply to all insurers, but don’t be surprised when your insurer asks you about your marital status.
- Your driving experience: People who are less experienced are likely to cause accidents and therefore they tend to pay higher premiums.
- Your driving history: If you’ve caused an accident before, you’re more likely to cause another one. Insurers will penalise you for it by charging you higher premiums.
- Security: Insurers usually offer discounted premiums to cars that have security systems.
- Excess: The higher your excess the lower your premiums.
What is an excess
When purchasing car insurance, some insurers will require you to pay a mandatory amount that you will have to pay when submitting your claim. For instance, if your damages cost R10,000, your insurer may request you to pay R1,000 first and the insurer will then pay the remaining R9,000.
Paying an excess minimises small and fraudulent claims, and it also reduces claim costs for insurers.
Before purchasing car insurance, shop around for better prices and value. Always remember that cheaper is not always better.
Compare the features and benefits of car insurance from different service providers. Many people try to save by paying lower premiums without realising that they could be paying more in future.
To get a free car insurance quote fill in the following form.
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