How to choose the right car insurance

Things to know when shopping for vehicle insurance Having car insurance should be just as important as having medical aid, and it’s amazing that so many cars on South Africa’s roads aren’t insured. We found some great advice and tips from the AA for how to go about choosing the right car insurance: Know what […]

Things to know when shopping for vehicle insurance

Having car insurance should be just as important as having medical aid, and it’s amazing that so many cars on South Africa’s roads aren’t insured.

We found some great advice and tips from the AA for how to go about choosing the right car insurance:

Know what you need

In South Africa, there are three types of vehicle insurance available.

Third party only cover is the cheapest option available. It does not cover loss or damage to your own vehicle but provides cover for damage you might cause to someone else’s vehicle. It also includes cover in the event of accidental injury or death of third parties

Third party, fire and theft insurance includes third party cover plus cover you if your vehicle is stolen, hijacked or damaged by fire. Remember you are not covered for damage to your own vehicle.

Comprehensive car insurance is the most expensive but also the most extensive. By paying more, you will be covered for events such as theft, hijacking, fire, hail, floods and loss or damage caused by collisions. Comprehensive cover includes third party cover.

If your vehicle is paid off, or you are in a position to afford a replacement easily due to a lower value, you might want to consider one of the cheaper options, but if you own a new or expensive vehicle, comprehensive cover is probably the best route to go. If your vehicle is financed it is a requirement of the finance company that your vehicle is comprehensively covered throughout the finance term, and if your vehicle is written-off and is without cover, you will still be liable to pay the instalment to the finance company.

Always consider top-up insurance cover if the amount that you owe on a new vehicle exceeds the insured value, so that you are not left owing money on vehicle finance if your vehicle is stolen or written-off.

Know the factors that affect the premium

Before giving you a quote on vehicle insurance, the insurance company will consider a number of factors.

The make and model, and age and condition of your vehicle are important, as is its replacement value. In addition, the area where you live, and whether your vehicle is locked in a garage at night or has additional security features such as a tracking device, will also be considered.

The insurance company will also consider your age, gender, driving experience and the number of previous claims. You will also have to state what your vehicle is used for. If you use it for business or deliveries, you might have to pay a higher premium but your claim could be rejected in the event that you are not upfront in declaring the type of use.

Shop around

Don’t base your decision on the premium only. Although settling for the cheapest insurance could be appealing, there could be hidden costs and risks – such as additional excesses and exclusions or the insurer applying average to your claim – involved. You should also consider value added products like home assistance and courtesy vehicles as well as no-claim bonuses. It is important to insure your assets for the current replacement value; if you insure your home contents or buildings for a lower value to try and get a cheaper premium, the insurer will apply average to your claim. An example of average is if the replacement value of your home is R1 million, and you only insure it for R 800,000, you have only insured it for 80% of its value. In the event of a claim the insurer will only pay 80% of the loss.

Take the time to get at least three quotes. And make sure that you compare apples with apples.

Speak to family and friends about their vehicle insurance providers. How do they rate their service and how quickly do they settle claims? Also, remember that you are free to ask the insurer as many questions as you require to make an informed decision. If in doubt, check it out!

Beware of lower premiums offered with very high excesses as this could negatively affect you in the event of a claim.

Know why claims are rejected

Just because your vehicle is insured does not mean that the insurance company will pay out every claim you submit. Terms and conditions in a policy are there to protect the insurer by specifying the rights and duties of the vehicle owner.

Also read: This is why your motor claim could be refused 

One of the main reasons why insurance companies deny claims is that premium payments aren’t up to date.  If you neglect to pay the premium every month your cover could lapse.  If you can no longer afford the premium it is wise to contact the insurance company to try and make alternative arrangements.  This could include changing to a cheaper provider or choosing third party only cover or third party, fire and theft.

Generally, an insurance policy covers a specific driver or drivers. If the person driving when an accident occurs is not named on the policy, the claim will be denied. The vehicle must also be in a roadworthy condition. If you don’t keep up with the maintenance schedule the claim might be rejected.

You should also ensure that all the information provided when you apply for insurance is correct. If you’re not upfront about issues such as your medical history and driving record the claim could be rejected.

Furthermore, if you don’t take adequate security precautions and your vehicle is stolen or broken into, the claim might be denied. In addition, most car insurance companies will refuse to pay out if the driver was intoxicated at the time of the road accident.

However, if you do feel that an insurance claim has been denied unfairly, a complaint can be lodged with the ombudsman for short-term insurance. Find more details at www.osti.co.za.

Remember that choosing wisely when it comes to vehicle insurance can protect not only your car, but your wallet too. So before you sign on the dotted line, make sure that you review and understand the policy.

Source: AA