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The importance of vehicle insurance
The right car insurance policy can spare you financial stress and keep you mobile.
Vehicle insurance is financial protection available for motor vehicles, motorcycles, light delivery vehicles, caravans and trailers. It provides a safety net, should your vehicle be stolen or sustain any damage caused by natural disasters, fire, or an accident.
You might feel that you don’t need insurance because you’re an excellent driver who knows how to adapt your speed and driving habits according to traffic, road quality and weather conditions, but that’s no defence against fire or theft. And accidents happen – remember that you have no control over the driving of other motorists. Statistics compiled by short-term insurance providers show that at least 70% of drivers in South Africa are uninsured, so if someone else causes an accident and is liable for the damage to your vehicle, it’s possible that they won’t be able to pay you, even if you engage in expensive legal action.
That’s one of the reasons why vehicle insurance is a requirement of vehicle financing loans. The right cover protects your financial peace of mind. Without it, a disaster beyond your control could leave you with a vehicle loan to pay off, but no vehicle.
Types of vehicle insurance
1. Comprehensive cover
Comprehensive cover is compulsory if your vehicle is being financed. It is the most expensive option, but it’s the best insurance you can get overall. Comprehensive vehicle insurance covers the following:
- The damage to your vehicle if you’re in an accident (excluding the excess, which is the payment that you must make when you have a claim),
- The amounts for which you are legally liable to a third party if the liability relates to your vehicle,
- Damage or complete destruction of your vehicle in the event of a fire, and
- Loss of your vehicle through theft or hijacking.
2. Third-party, fire and theft cover
Third-party, fire and theft cover is cheaper than comprehensive vehicle insurance, but it does not cover you if your vehicle is damaged or written off in an accident. Instead, it covers:
- amounts for which you are legally liable to a third party if the liability relates to your vehicle,
- damage or complete destruction of your vehicle in the event of a fire, and
- loss of your vehicle through theft or hijacking.
3. Third-party cover
This is the cheapest type of cover, but it will only cover amounts for which you are legally liable to a third party if the liability relates to your vehicle.
Vehicle insurance tips
Vehicle insurance doesn’t cover vehicle maintenance, services or normal wear-and-tear items like fluids, globes and tyres.
It’s better to insure a vehicle for its retail value (depending on various factors), rather than its market value. The market value is usually lower, which will influence the payout on a written-off or stolen vehicle.
A higher excess usually means a lower premium. If you do take this option, make sure you have savings available to pay the excess if you need to claim. Opening a notice account is a good way to save for an emergency fund while earning interest on your money.
Read the insurance policy or schedule to see what it says about the regular driver. The premium is calculated on the profile of the regular driver, so it is important that the information is noted correctly for your vehicle(s), as this could have an impact on a claim.
Ensure that you classify the vehicle for ‘business’ or ‘personal’ use correctly when you apply for the policy, as this has an impact on your premiums. If a vehicle is not classified correctly, it could result in a claim being rejected.
Many insurance providers offer bundled insurance products, which include comprehensive cover for your vehicle alongside other types of insurance in one package. The premium for bundled cover may work out cheaper than investing in several separate insurance policies, so explore these options when you’re looking for vehicle insurance.
For more information on vehicle insurance, call us on 0860 333 111 or send us an email.
