It is a common myth, spread by the tour guides in Paris, that vehicle insurance companies do not cover accidents around the 10 lane, 12 exit roundabout that is the Arc du Triomphe in the heart of Paris. If you ever see the chaos of traffic around that circle, it's not hard to understand why!
But, it's not a far stretch from any other day of traffic in Joburg CBD.
A study done by the Automobile Association of South Africa, revealed that 3 in 1 vehicles on the South African roads are not insured. That’s about 1.4 million vehicles! Coupled with the number of accidents and deaths on our roads, this is a very risky and expensive position to be in. Too many people are facing the danger of being semi-crippled if they are part of an accident.
Why are people not insured?
CompareGuru asked around and discovered that the main reasons why people choose not to insure are because they experience:
- Unaffordable premiums - with the high cost of living, an additional premium to the vehicle instalment and fuel costs already becomes too much for the budget to handle.
- Lack of trust - it is a grudge cost, one that drinks away the hard earned cash and shows no real immediate reward (until one needs it - but that is never a desirable position to be in)
- The “it won’t happen to me” mentality - until it does of course.
To help you work through these uncertainties, let’s work together to help you understand more about vehicle insurance. We’ll start by covering the basics below and a bit more in following post. Sign up at the bottom of the page to stay updated!
What is vehicle insurance?
Vehicle insurance is an agreement with an insurance company to cover any losses suffered to the vehicle in the case of an accident or any other damage. It is there for your financial protection - protecting you from probable, future and unexpected financial loss. And not only does it give you financial cover for damage to your own vehicle but also for damage to another’s vehicle.
NOTE: It is important to make sure exactly what the package covers - you don’t want to end up in a position where your package covers the cost to repair your vehicle, but not the vehicle of the other party (if you are responsible for the accident)
3 Types of vehicle insurance
You need to know what type of cover is available and then also what exactly it covers. This is also depends on where you go to get the insurance cover. However, here are the 3 most common type of vehicle insurance packages out there:
1. Comprehensive Comprehensive cover is the most expensive one. It covers theft, hijackings and loss or damage by accidents, fire and natural disasters like hail and floods. Further, it also provides coverage for any third party claims (claims from the other person in the accident) where you are responsible for the damage to their vehicle.
2. Third party, Fire and Theft This type of coverage covers only theft, fire damage and hijackings. It does not cover damage caused in an accident. It will also cover any damage suffered by the third party that you have caused.
3. Third party only This is the cheapest option. It covers any damage caused to the third party that you are responsible for, yet it covers none of your costs at all.
Note: Third party, fire, and theft is acceptable when one’s vehicle has been paid off or is of low value. But it is extremely advisable to get third party coverage, as the cost of repairs from one’s own pocket can be crippling, especially when the other vehicle is an expensive and relatively new model.
Why is vehicle insurance important?
Fathers always say to their children who step behind the wheel for the first time, “It’s not you I don’t trust, it’s the others on the road with you that I don't trust.”
Although the truthfulness of this statement may be questionable, it does also vehiclery some merit.
The streets of South Africa are a very dangerous place. Unfortunately, anything can happen, no matter how strictly you stick to the rules of the road or how vehicleefully one drives. Anything can happen and having financial backing for this risk is never an unnecessary expense. You will be protected every time you hit the road.
After one’s house, one’s next biggest assets will most probably be one’s vehicle(s). It may also be one of the most expensive assets you own. If something had to happen to it and you were not covered, all the replacement or repair costs will have to come from your own pocket, and perhaps the other person’s costs too. Thus it covers costs and removes your involvement in long and strenuous lawsuits.
Further, one is heavily dependent on one’s vehicle for mobility. If something had to happen and leave you stranded, it could have severe consequences on your life. It protects one of the most important assets one owns that one worked extremely hard to afford.
What you need to know for now In the next post, we’ll talk about the cost of vehicle insurance and some tips on how you can pay less on your premium! Remember to sign-up below to stay tuned and that you can compare vehicle insurance options on the Fincheck Platform.
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