Car Insurance in South Africa – An Overview

If you own or drive a car, then it is highly advisable to make sure you have car insurance in South Africa. Whilst it is one of those things we hope to never need, statistics speak volumes for its necessity as well as recognizing that insurance gives us all peace of mind, knowing our cars are fully insured. I will explain the reasons for having car insurance, as well as list some of the types of insurance available, along with points to note in terms of optional extras that can be considered as well.

What is Car Insurance?

For a start, car insurance is the process of taking out a policy to protect your interests in the event of an accident, theft, or any other type of misadventure to your vehicle or its occupants. Furthermore, even if you and your car are intact after an accident, you may damage other property or persons, thus requiring that you have coverage to insure you are not left out of pocket after an accident. There are different types of car insurance that an be bought, and I will explain them below, as well as present some ideas for your consideration.

How does car insurance work?

Car insurance, like any other insurance, is about reducing your risk. However, the insurance company will also take into consideration, certain risk factors that they may face as well. In other words, the insurance company will not issue a blanket policy to everyone with all the same conditions. They will typically operate in bands that take into consideration factors like age and risk profile for each type of car and driver. As an example, a young driver who has just got their licence, is potentially more likely to experience an accident, as their driving experience is less than a proven driver who has been driving for many years without any incident.

There are added factors like the type of car that the driver is in charge of. A typical family sedan is safer than a high powered, eight cylinder sports car, from the point of view of a risk profile. Hence, it is more likely that a young driver, with little experience, behind the wheel of a high powered sports car may get into trouble and experience an accident.  These facts are all considered by the car insurance company, based on statistics and actuarial calculations. It certainly may seem very complex, but essentially, all insurance companies build these statistical tables to analyse the chances of an accident in various situations.

When you call, or go online to buy a policy, the company will ask you questions like your age, type of car, time spent behind the wheel and so on, and then present you with a quote. When the quote is accepted and the premium paid for, you are insured for the period of time on the policy, which is typically for a period of a year. In the event that any claimable issue occurs, it is up to you to notify your insurance company or car insurance broker so they can then asses the situation.

Most policies will incur an excess during the claim, which is an agreed amount that you will contribute. If you have a R500 excess, you will be required to pay R500 when making a claim, and the insurance company will pay the difference for the repair. Again, they take all the circumstances regarding the claim into consideration before arriving at a decision.

It should be noted that for each year that you do not incur an accident or specifically, make a claim, you are able to build up what is known as a no claim bonus. This means that when you have been insured for a period of a number of years, and not had any accident, or reason to claim, you effectively receive a discount, for your good record. Unfortunately, if you need to claim, this will affect your good record and you may find your premiums are increased later on to reflect your potential risk to the insurance company.

Why do you need car insurance?

Car insurance is essentially, peace of mind for your driving and your car. As I have mentioned, you hope not to need it, but at the same time, you may be virtually not at fault in the event of an accident. If you are at a red light and someone drives into the back of you, there is very little you can do to prevent such an accident. It is nice to know that your repairs and any potential medical costs may be met by either your insurance or that of the other driver.

I would like to point out that you should never rely on the fact that you are a good driver, and the other driver’s insurance will cover you in the event of an accident. To ensure maximum peace of mind, you need what is known as comprehensive insurance. This means you have the highest level type of policy where you are covered for just about every possible scenario. However, there are some points to bear in mind.

In many cases, if you are found to be driving above the legal limit of alcohol permitted in your body, you will find that you will not be covered for such a situation. Even though insurance will help in many cases, you are still required to operate and drive within the limits of the law. However, items like belongings stolen from your car are covered with comprehensive policies, as are third party damage.

If you feel your car is of little monetary value, and you would not be negatively affected if it were written off, you can still get third party insurance only, which does not cover your car, or yourself, but will cover other people’s property.

Based on the scenes and situations we come across however, it is strongly recommended that you seriously consider comprehensive insurance. Apart from your own health and safety, the cost of even a ‘small’ accident can be very costly, with the cost of parts for vehicles and other repairs. Car insurance is a very cheap price to pay for peace of mind.