No matter kind of car that you drive, at some point you will need car insurance. This is because road accidents can happen when you least expect them. So it very important to be prepared when they do happen, than to panic at last minute. There are various types of car insurance packages, and it is very unlikely that you will not find a cover for you.
What is Car Insurance?
It is basically like life insurance, but for a car. If you have a life insurance policy, then car insurance should be slightly easier to understand. Car insurance can vary depending on the type of cover that you need. Various covers include accident damage, hijacking, damage caused on third parties among other things. In order to get the best out of your insurance company monthly subscriptions have to be paid. The money that is paid per instalment is the same money that given back to an individual when a mishap occurs.
Benefits of Car Insurance
The roads in South Africa are one of the most hazardous in the world. As a result, every driver needs car insurance.
A few of the benefits of car are:
- Peace of mind: When driving around, with an insured car, drivers have peace of mind. Knowing
full well that regardless of what accident or misfortune that they may come across, they are covered.
- Monetary backing against theft: South African Police Service, (S.A.P.S) statistics of 2016/17 show that more than 16 000 cars were reported stolen during the mentioned period. Car insurance provided financial backing against such thefts.
- Medical Expenses: Car insurance also provides monetary coverage for any medical costs that are incurred in car accidents. Depending on the type of policy, pay outs can be given for every day that a client spends in hospital.
- Cover against fire and natural disasters: As much as the weather report can give weather forecasts, it is hard to predict the weather 100%. So, when a car is insured, the client gets covered for any natural disasters that may occur. The coverage further includes damages that are as a result of fires.
- Legal Backing: Motor vehicle coverage further provides financial and legal backing. The insurer provides lawyers when car related cases have to be settled in court.
- Backing from Lawsuits: The insurer also provides defence lawyers to help clear the name of the clients in road accident lawsuits.
Types of Insurance
Basically there are three type of car insurance in South Africa, comprehensive, third party and theft, and third party only.
Third Party Only
This is the cheapest form of insurance that is offered by most companies in South Africa. This is because it has the fewest benefits accompanying it.
What is and is not covered?
- Covers third parties when an accident occurs.
- Doesn’t cover the client’s car for any type of damage regardless of theft, hijacking, fire or natural disasters.
- Usually bought by people who use old cars with low millage.
Third Party and Fire
This insurance is most basic type of car insurance. Depending on the insurer that the client chooses, this cover can either be cheap or expensive. Contrary to popular belief, third party and fire is not always cheaper than comprehensive cover.
What is and is not covered?
- This type of insurance covers damage that is incurred when the client is at fault.
- The client however is not covered in this type of insurance, so they have to fund the repairs of their car if it is damaged.
- On a lighter note, hijacking, theft, fire, lightning and explosion is covered in this insurance.
- This type of insurance is suitable for cars that are almost paid off and that clock up medium mileage.
Comprehensive cover is insurance that covers basically covers all the aspects of damage that are incurred in an accident. It can be very expensive, depending on the insurance company.
What is and is not covered?
- Comprehensive cover covers all the damage that is done to the clients car in the event of an accident.
- Third parties are also covered when a road mishap happens.
- Hijacking, fire, explosions, natural disasters are also covered in this insurance.
- Clients who usually require this insurance are those that are financing the payment of their own car.
- If someone has a new and expensive car, this is the insurance policy for you.
- People who own cars with high mileage are also partakers of this insurance.
N.B- Car insurance depends on the insurer’s terms and conditions. Clients are advised to fully understand an insurance policy before they purchase it.
Factors that Influence Insurance Premiums
Various factors influence the type of insurance that clients seek. The main are:
- Type of Cover
- Marital Status
- Car Driven
- Claim Record
Type of cover: The type of cover that a client wants naturally affects the amount paid per month. As the covers are all different, they all offer different prices.
Age: The age of a driver is also another premium determining factor. This is because it is believed that younger drivers are more prone to risk than older drivers. Hence, for a younger driver, premiums are higher.
Sex: it the general belief that men are more likely to cause accidents that women. This is because most cases show how men are prone to drive under the influence of alcohol and are not fond of using seat belts. This making their premiums higher.
Marital Status: Various studies have shown that married couples are less likely to get involved in road related accidents that their counterpart singles. Hence, for married couples, monthly payments are lower.
Location: Those in rural areas have significantly lower premiums, this is because these areas are of lower risk than those in urban areas.
Car Driven: The model of the car that is driven can greatly affect the amount of money that is required for a premiums. This amount will also include, model, year, price and how long the car has been driven for.
Security-The amount security that comes with the car will also influence the premium paid. For instance, if a car has antitheft gear like an alarm, anti-hijack, satellite tracking, garage parking, the premium will be lower. Comparing it to one that is parked in the street without any anti-theft features.
Excess: This is the amount of money that a client pays when claiming from an insurer. The more money paid, the less the premium. The less money is paid, the higher the premium.
Mileage: Cars with higher mileage are considered to have more chances of risk than those with less mileage. As a result, a car with higher mileage will have a higher premium rate as compared to car with less mileage.
Driving History: The history of the driver is also taken into consideration when a premium package is requested. If the driver has no history of reckless driving or having any accidents, their premium can be low. This is compared to a driver who has a history of reckless driving and causing accidents. This driver will have a higher motor insurance rate per month.
Experience: The less the experience, the higher the coverage price. The more the experience the less the cover price. Experience is regardless of age. This is because a driver may be 25years old, but has been driving aver since they were 16. As compared to a 40 year old driver, who just started driving. That is how experience comes to relate in premium prices.
Claims Record: Various researches that have conducted have showed that drivers who earn less tend to claim more than drivers who earn more. As a result, drivers who earn less are prone to get their premiums at higher prices than those who earn more.
Credit: How much an individual is paid can affect the cover that they get. If a client cannot afford the package that they want, they are in most cases asked to get a cheaper cover or kindly asked to look for another insurance company.
Coverage History: Insurance companies also take into consideration how often a client paid their past insurance charges. If they have a steady payment history, their charges become significantly lower than a person who rarely pays.