What is Car Insurance?
When you take out a car insurance policy you buy insurance cover against loss, damage and liability. The insurance company who provides you with the cover will compensate you for losses suffered in return for the monthly premiums you will pay to them. The losses that they will insure you against are called perils; here are some examples: accident damage, theft, hi-jacking, and natural disasters such as damage caused by fire, lightning, hail or storms.

Car insurance is compulsory in most countries but not in South Africa. If you buy a car and obtain finance from a financial institution though, they will insist that you take out comprehensive insurance cover and provide them with proof before they will release the car to you. We all pay a fuel levy which is allocated to the Road Accident Fund which has been set up to compensate third parties in the event of an accident. However, it is highly recommended that you do not rely on this cover in any way, (ask anyone who has ever gone that route) rather make your own insurance arrangements.

Is Car Insurance a Necessity?
As we said in the previous paragraph, you will need comprehensive car insurance if you take out car finance (previously known as hire purchase.) Even if you drive a run-down old jalopy you need to think about car insurance. There are different car insurance policies available on the market and taking out insurance for third party, fire and theft is much cheaper than comprehensive car insurance cover. You may not be too concerned about your old car but if you hit that stationery Porche....well, it’s too late to think about it then.

In beautiful South Africa our roads, unfortunately, are simply not safe: we have one of the highest accident rates in the world, hijackings, car theft, road rage, you name it. Car parts are very expensive; as you will know if you ever had an accident and had to pay for the repairs yourself. Car insurance is a powerful weapon against risk and the better the cover you can afford, the more peace of mind you will have. It’s up to you to decide how much your peace of mind is worth; remember that a claim from a third party where you were at fault can ruin you financially.

So where do I get it?
Many people do accept that it is in everybody’s best interest to have car insurance and they take the first cover, or the cheapest cover they can get. Don’t—rather get educated. Take some time to decide exactly what your individual car insurance needs are. Have your own brainstorming session and list what you want from car insurance. If you drive an old car you may not need comprehensive cover, so why pay for it?

Learn as much as you can about the subject by visiting internet sites on the topic of car insurance. Also, ask your friends and family about their experiences with car insurance companies. Word of mouth is the best advertising there is. If the insurance terms are just jargon to you, use the glossaries available to help you make sense of it all. Ask—phone insurance companies and ask them to explain the terms you don’t understand. Use the internet sites to post your questions on. Use the different insurance sites available to see what products are available on the market. You can obtain insurance quotes by phoning the different insurance companies, you don’t have to waste your time going into their offices.

Even better, get your quotes online. This you can do on any site offering this service, either the insurance companies own sites or aggregator sites. Aggregator sites deal with different insurance companies and you only need to complete your details once online. They will then obtain the various quotes for you and send them to you. This will assist you in making an informed decision.

Only once you have all the information you need and found the product that meet your needs the best do you decide where to take out your car insurance. Even then, learn the art of negotiation and see if you can’t get a better rate.