So many types of car insurance, so little time
Important points to ponder
A whopping 65% – 70% of South African drivers don’t have car insurance. This means that every time you get on the road you are taking a significant risk. To make matters worse, the consistent power cuts from Eskom are turning the country’s roads into the wild West, with people taking chances and behaving recklessly at every turn.
While the government has considered introducing mandatory third-party insurance, thereby forcing careless drivers to pay for any damage they cause, this is unlikely to come to fruition any time soon. If Eskom and e-Toll are any indication, it’s clear that the government is struggling to implement and enforce much of anything.
The responsibility of taking care of your property falls to you alone. But with insurance carriers becoming as prolific as gas stoves in South African homes, you are probably feeling overwhelmed by the sheer number of choices.
So, what should you consider?
Which insurance option covers what?
As we’ve already established, it’s critical to protect yourself from uninsured drivers, so comprehensive cover that accommodates this is always preferable – if you can afford it. And with an increase in VAT that’s made everything pricier, the collision coverage that forms part of extensive insurance will protect both your pocket and your peace of mind.
Make no mistake – this is not a question of how careful or competent you are as a driver (though this surely helps). There are just too many kamikaze taxis and impatient road-ragers for you to leave the protection of your property to chance.
If your car is relatively new, comprehensive cover is also the better option because you escape the tentacles of chance – or acts of God. If a rock unexpectedly cracks your windshield, you’re covered. If a tree collapses on your boot, you’re set. You will need to pay a small excess amount, but this is certainly preferable to a massive payout that could come out of nowhere.
Now before you rush out the door to get that comprehensive cover, take a moment to consider how much your vehicle is actually worth. You may think it’s the most valuable possession you have because it carries all your precious memories – a first kiss, varsity excursions to the pub, or road trips with the family.
But, the truth is that extensive coverage simply makes no sense for a car that’s on its way out. It’s important to have your car assessed to determine its monetary value and select your insurance accordingly. If you have a clunker you should at least have third-party insurance just in case you crash into a flashy Porsche.
Remember, the Road Accident Fund pays for injuries to third parties, not material damage.
What affects your premium?
Now that you have some sense of what kind of coverage is necessary and which is preferable, it’s important to find insurance at the best price possible. These days there’s no excuse to be lazy – you can easily collect estimates from different insurers by taking advantage of online quotes.
The premium you’re offered is influenced by many factors. Some you have power over and others you don’t. For instance, your place of residence has been rated more risky or less risky based on crime statistics. Since more dangerous areas put your vehicle at greater risk, this will increase your monthly premium whether you like or not. Your age and sex also play a role – if you’re older you pay less and if you’re a man you pay more.
While you’re unlikely to up and move because of the risks of your neighbourhood, you can still mitigate these dangers and reduce your premium with added security at home. Consider making adjustments to your home that will make it a safer place to store your car – build a garage or add an alarm system. You can also fortify your vehicle, and reduce your premiums, by fitting it with an alarm, anti-hijacking device, or tracker.
Your own actions go a long way. By maintaining a clean driving record, you demonstrate that you’re less of a gamble, lowering your premium. And before you buy your next car, check which models are considered high-risk and stay clear of them.
If you are lucky enough to have some savings tucked away, there’s another strategy for getting that monthly premium down: increase the excess amount and you will pay less per month.
Keep in mind that this is only wise if you have a chunk of change ready to go in the event of an accident. You can then maintain a lower premium over time by not submitting small claims you can handle yourself. The fewer claims you make, the more likely it is that your premium will be kept the same or reduced.
South Africa is already one of the most dangerous countries in terms of road safety. In the midst of more dead robots and tired, cranky drivers, the risks are on the rise. The country’s inferior public transport services only increase the value of your vehicle – you are not just protecting your property but your livelihood. So, don’t wait for the next power cut and take back your power today!