Car insurance seems easy: you pay for protection and, if an undesirable accident occurs, the insurance company has to respond covering the damages or car repairs. Well, in simple terms, that’s the way it works, but there are a few aspects that need to be considered before taking an insurance policy.
The presence of car insurance is still low in South Africa. In fact, having this kind of policy is not required by law, which can explain the difference shown in comparison with other countries where taking insurance is mandatory for car owners.
Nowadays, nearly 70% of South African motorists have no cover. This percentage is huge considering the more than 11 million registered vehicles coming and going by the roads.
However, every car owner should think seriously about taking some coverage. It keeps the property protected, not only from theft and robbery, but also from road accidents, events that unfortunately happen quite often. In fact, studies have shown that some car models are more likely to be involved in a fatal accident (more details). Regarding South Africa, these models are Volkswagen Polo, Toyota Hilux and Toyota Quantum.
As it was reported by the Road Traffic Management Corporation (RTMC) reports, from October 2017 to June 2021, a total of 37,583 fatal crashes were registered in South Africa with 45,232 fatalities. Only in the last three months of 2021, the RTMC reported 3,000 fatal crashes taking place in the country roads and streets. It means 1,000 fatal crashes per month.
So, if you got convinced about taking out insurance coverage, then there are a few details that you should contemplate before choosing the company.
First of all: how does the policy work?
For those who are not familiar with the insurance world, it is important to learn the concept of excess. Let’s understand it with an example: a car owner suffered a minor accident and the repair cost is R20,000. Luckily, this person has insurance coverage. So, if he wants his company to fix his car, he will have to pay the excess amount, and then the insurer will cover the rest.
Generally, this excess is between R2,500 and R10,000, and nearly all insurance companies have a compulsory excess. Still, the insured can choose to increase or decrease the excess, which of course will affect the price of his policy: if a higher excess is settled, then the monthly premium paid by the insured would be lower. Instead, if a lower excess is chosen, the monthly premium increases.
What about the policy prices?
As a rule, in the insurance industry, the price of the coverage gets linked to the protected asset value. So, in this case, the market car price will be the one that determines the cost. It is useful to try a car insurance calculator to previously know how much you will be paying for your car protection.