Car Insurance
Loss or damage of assets such as a car can be disastrous, therefore the need to take out insurance.
A car insurance policy is a contract between the insured (the person whose car is being insured) and the insurance company. The insured undertakes to pay a premium, usually monthly, to the insurer who, in return, provides the insured with cover against risks as specified in the policy. A loss must be suffered by the insured before a claim can be made.
The risks can include damage to the car through accidents or other perils (risks) such as fire and hail, injury, loss through theft, hijacking, vandalism, falling objects and claims by third parties.
Different types of car insurance policies are available in South Africa, the main classes are:
- Comprehensive cover that covers most risks
- Third party, fire and theft
- Third party only
The premium paid by the insured will depend on the type of insurance cover bought as well as on the risk profile of the insured. This will include age, the actual car’s value, gender, security measures, residential risk area rating, claims history and credit record of the insured.
Car insurance provides protection from losses that result from either owning or operating a car. Mechanical losses are not included in car insurance and separate cover called mechanical breakdown cover must be taken out to protect against this risk.