Just as you shopped around to find the best value for money when buying your car, the same due diligence is required when comparing car insurance quotes. With South Africa’s high road traffic accident rate, in addition to the prevalence of vehicle-related crimes like hijackings and car theft, it is unwise to own a car without suitable car insurance cover to protect you against the financial loss in the event of an accident, hijacking or theft.
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Unfortunately car insurance is not cheap in South Africa. Depending on your risk profile and that of the vehicle, you can expect to pay as much as one-third of your car installment in insurance premiums. However, the car industry is highly competitive and insurers are constantly striving to offer the best value for money. By shopping around and comparing quotes with the proper insight, you may be able to find a better deal on your car insurance premiums.
Types of Cover
Broadly there are two types of car insurance cover – comprehensive car insurance and third party car insurance. Comprehensive cover is the top end of the offerings where your vehicle is covered against vehicle theft, damage and loss while also paying for the costs incurred by other drivers when the accident is your fault. Third party cover on the other hand will only pay for the other vehicles you may have damaged in the event of an accident.
Another type of cover offered by most insurers is also sometimes referred to as basic car insurance cover. It will pay for the third party damages and will also cover your car against theft or loss that is not accident related. Any damage or loss of your vehicle from an accident will not be paid for by these types of car insurance policies. To some extent basic car insurance is the in-between policy between comprehensive cover and third party cover.
Never try to compare a comprehensive car insurance quote with that of a third party or basic cover. It does not make any sense as you are essentially comparing ‘apples with oranges’ as the saying goes. Also do not be misled by alternative car insurance policies. As yet there is no alternative insurance cover for vehicles that can replace the benefits of comprehensive cover.
You may also need to consider top up car cover if your vehicle is still under finance. This will ensure that any shortfall between what the insurer pays the lender (such as the bank or dealership financing house) and what is owed on the vehicle does become your personal responsibility.
Excess Payable
The claim excess is an co-payment amount that you are liable when claiming for an accident or vehicle loss. Some insurers have a set rate while others may charge a percentage of the overall claim. The higher the excess the lower the car insurance premium but do not be fooled by these low premiums. Many consumers are misled with these excess amounts and do a car insurance quote comparison without thinking of future circumstances.
Some car insurers also offer no excess policies. This means that you will not be liable to pay any excess at the time of the claim. However, these no excess car insurance policies do not come cheap. Usually the premiums on these types of policies are significantly higher than car insurance cover where there an excess is payable. Nevertheless it does offer car owners the peace of mind of not having to pay an excess when a claim is submitted.
Before opting for a higher excess, remember that you can never be sure of your future financial position. Situations can change overnight. Depending on your financial position at the time of a claim, you could find yourself unable to repair or replace your vehicle due to an exorbitant excess. While you may save a few hundred Rands per month in the short term, you may have to fork out thousands if not tens of thousands of Rands at the time of a claim.
Book Value or Replacement Value
Car insurance premiums increase depending on the potential payout. If you drive a more expensive car then you will usually pay a higher premium because the insurer will have to payout more at the time of a claim. However, the premiums can also vary on the same vehicle depending on whether your the payout is based on book value or replacement value.
Your car is constantly losing value due to depreciation and the book value is what your car is worth at any point in time. This value is not necessarily the same as the amount required to purchase the same car with the same mileage and extras on the secondhand market. Often the book value is lower than the replacement value. Therefore the insurance premiums are lower due to smaller insured amount.
This is another common mistake that many car owners make when comparing car insurance quotations. It is easy to grab a good deal but if the cover is not financially protecting you adequately, you will find yourself out of pocket at the time of a claim. Make sure that you clarify with the broker and insurer when you compare a car insurance quote that the insured amount is either the book value or replacement value, depending on which you prefer.
Car Hire and Other Extras
Peruse all quotes carefully when you compare car insurance. The extras that are included in the policy can increase premiums but it may give you the peace of mind that you need in the event of vehicle damage or loss. Car hire on your car insurance policy is one such example. It may add around R50 extra to the final premium but it can save you thousands of Rands when you need a vehicle but it is at the panel beater or has been written off.
Some insurers will also offer free satellite tracking if you install a device of their choice. Others will offer a small reduction in the car insurance premium if you pay for a satellite tracking service for your vehicle. Also look at roadside assistance and towing services that may be included in your policy. These services can be expensive if you do not have existing cover. Collectively these extras are money savers which you should factor into your comparison of car insurance quotes.