The Territorial Limits in a car insurance policy document explain in which areas or countries the insurance company will accept responsibility for damage or loss. Any claim for an insured event that took place outside the borders of the territorially limited area will not be paid by the insurance company.

In South Africa most car insurance companies will include the following countries in their lists of countries enjoying cover: South Africa, Botswana, Lesotho, Malawi, Mozambique, Namibia, Swaziland and Zimbabwe. Only the insured person will be covered when driving in these countries outside South Africa.

Do not accept that your car insurance policy automatically include these countries. Check before you leave the South African borders. Off-road insurance for 4X4’s may include more countries – again – check first. If you want to use your car inside countries excluded you can still contact your insurance company to see if they are prepared to provide you with special cover for the time you will be there.

Territorial Rating is the term used where insurance companies classify risks by geographical location when setting car insurance premiums. In South Africa we have good examples of that; you pay much more for car insurance in some areas due to those being classed as high risk areas.

Theft of cars and carjacking is still a very serious problem in South Africa. The crime statistics for the year ended July 2008 show a decline in car theft of 7%, yet the number cars stolen, 80 226, is still astronomical. The rate of carjacking has increased by 4.4% to 14 201 and that is of grave concern to all motorists and car insurance companies. 70% of the carjackings took place at the owner’s premises.

These statistics, on the one hand, underline the need for car insurance in South Africa and on the other hand also explains why car insurance premiums are so high. As a motorist you need to, not only have sufficient insurance cover but, also take preventative care to protect yourself and your loved ones against these crimes as far as possible.

Some measures you can take:

• Be alert at all times – know what is happening around your car, especially when approaching your home.
• Don’t stop at isolated places and only park in well-lit areas.
• Keep the windows shut and doors locked at all times.
• Remember your life is more important than your car.
• Use security devices, the best you can afford.
• Don’t leave property in your car where it can be seen.
• Keep up to date with the latest tricks used by carjackers.

When insuring a car full details must be supplied to the Insurance Company. You will be asked to provide the following information: The make and model, registration number, any security fittings you have installed such as an alarm system or tracking device, where you park your car at night and if it was bought under a credit contract agreement.

The make of the car actually plays a big role in determining the insurance premium as some cars are very popular with thieves, therefore posing a bigger risk to insurance companies who will ask a larger premium on those cars. Driving a modified, or sports model will also cost you much more in insurance. The probability of driving at high speed increases the risk of serious accidents and you pay for that in higher insurance.

The type of car insurance you decide on will depend on the value of the car and whether you still owe money on it. If there is an outstanding balance on the car the bank will insist on full comprehensive insurance. If you are driving a fully paid off car with a very low market value you may consider taking out third party, fire and theft cover only.

In general insurance, which includes car insurance, the first party to an insurance contract is the insured – the person who applied for insurance and is now the policyholder. The second party involved is the insurer, the person or institution providing the insurance, most commonly known as the insurance company.

Anyone else, who has a supposed (or alleged) or an actual right of action against the insured person, represents a third party. Third party basically means “someone else.” This right of action can be for injury, death or damage to property belonging to the third party. The third party can be another motorist, a passenger in the third party’s car or in the car of the driver who caused the accident, or a pedestrian. It could also be the owner of other property that was damaged by the insured person’s car, such as a house or parked car.

In South Africa claims from third parties for injuries or death is handled by the Road Accident Fund (see this section for further details) but the property of the third party  is not covered under the fund and therefore third party cover becomes a necessity in car insurance.

An insurance company can claim from a third party in the case of subrogation (see subrogation for more details.)

Third Party, fire and theft is an insurance type available in South Africa. Comprehensive insurance provides the best cover and is therefore also the most expensive. Third party, fire and theft is a cheaper option and if you drive a rather old car you could consider this as an alternative to comprehensive cover.

This policy will cover you for theft or carjacking, fire damage and claims from third parties should you be involved in an accident. However, you have no cover for accident damage to your own car – you become your own insurer against this particular risk. This option of insurance could be viable if you drive a fully paid-up, old car that has a very low book value. It is not an option if you still owe money on your car, then comprehensive cover is a requirement.

Without third party cover you run the risk of huge liability claims against you. Your car may not be worth much but if you damage another expensive car you will be held liable for the damage, it’s simply not worth taking the risk to be without this cover.

You could take out third party insurance only but the additional cover for fire and theft will not make a huge difference in the price and it does provide you with that additional cover.