Photo by Pixabay Car Insurance – what do I need to know?
The Ombudsman for Short-Term Insurance in his annual report emphasized the need to educate the public on insurance matters. The Ombudsman for Short-term Insurance in South Africa recovered a record amount of R83.9 million from insurance companies on behalf of complainants in 2007.
A staggering 67 percent of the complaints received in 2007 related to motor vehicles. A large number of complaints arose from a lack of understanding of insurance or a failure to understand the significance of the information given to an insurer when applying for insurance.
There are many insurance companies out there and it can be quite tough deciding which to opt for. Before getting vehicle insurance, it is necessary for you to get a detailed view of different insurance quotes from more than one insurance company. The car insurance quotes may be different for different companies, so it is your responsibility to carefully look into the insurance quotes and then decide which one is suitable for you and your vehicle.
Do your research and shop around. Get at least three comparative quotes.
Don’t make a decision based on the premium only – make sure you know about hidden costs such as additional excesses.
Consider the insurer’s reputation for service, price and claim settlement turnaround times.
Make sure the company you choose is a registered Financial Services Provider. You can verify its registration with the Financial Services Board which regulates all insurance companies.
Take time to discuss the details of your insurance policy with the direct insurer or broker.
Compare apples with apples. This means, for example, checking if your vehicle is covered for retail or market value and ensuring the excesses are similar.
Make sure you buy insurance from a reputable company- otherwise you may find that your cover is not worth the paper it is written on when you make a claim. Remember that you have a right to make an informed decision – demand all the information you need before signing a policy application!
Types of Car Insurance
The vehicle owner needs to be aware of the variety of vehicle cover options. Some of these descriptions are:
Comprehensive Cover: covers your vehicle for accidental damage, theft and hijack, as well as injury to other people or damage to their vehicle in an accident
Balance of Third Party, Fire and Theft Insurance- provides you with cover for damage to the other party’s vehicle in the event of an accident, and for your vehicle in the event of loss by theft, or fire.
Balance of third party is the most limited form of cover. It does not cover you for damage to, or the loss of, your own vehicle, but it covers the costs of damage to the other car in an accident you cause
Limited Cover: covers your vehicle for damage caused by fire, theft and hijack, as well as injury to other people or damage to their property, Accidental damage to your vehicle is not covered.
Liability to Other People: covers you for liability to other people where an accident caused death or injury to them or damage to their property.
Essential Cover: no frills option for older, lower value vehicles where you choose the combination of and amount of cover that you need.
Policies may also include a wide range of options and benefits. Without discussing this in depth we would like to name just a few:
Bodily injury liability, property damage liability, medical payments coverage, uninsured or under insured motorist coverage, comprehensive coverage etc, are some of the great vehicle insurance benefits available.
Medical payments coverage assists in paying medical expenses, even if the insured person is injured in somebody else’s vehicle. Uninsured motorist coverage protects against expenses incurred as a result of an accident that is caused by another individual who is either uninsured or who has inadequate coverage.
Other general vehicle insurance benefits are the cars being covered for their retail value, the fact that you will pay a fixed excess and that repairs done are guaranteed for 12 full months.
Another benefit is the provision for extending coverage to others driving your car with your permission.
Twenty four hour emergency roadside assistance as well as cash bonuses for not claiming are more insurance benefits. This and many other less obvious vehicle insurance benefits are included in vehicle policies
My car/ motor vehicle is insured – what now?
It is important to see the purchase of an insurance police not as a once-off transaction! An important bit of advice is to make sure your insurance company monitors the insured value of your vehicle from year to year. Cars tend to lose value and the book value is what the insurance company will pay out in case of a claim, nothing more. If you pay premiums based on the initial purchasing price, but the second hand value is worth less, the discounted value will be paid out. There is therefore no reason why you should insure your car for more that this value.
It is important to note that a comprehensive insurance premium is amongst others, made of an accident portion (major part) and a theft portion. Even though the car does depreciate it should be kept in mind that spare parts and labour generally get more expensive with the unfortunate effect that there might not be an automatic drop in premium year after year.
Best advice is to contact your insurer or broker and consult with them on whether your premium might be adjusted.
Continue to improve your driving ability and drive with caution. Even though your car insurance is in place – you would rather like to avoid vehicle and bodily damage!
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